1951-06-14

REPORTS OF COMMITTEES

[Stage Direction]
Eighth report of standing committee on railways, canals and telegraph lines.-Mr. Whitman.
Eighth, ninth and tenth reports of standing committee on miscellaneous private bills.- Mr. Winkler.


Mr. H. W. Winkler (Lisgar) moved:: That, for the remainder of the session, standing order 105, respecting the posting of private bills, be suspended.


[Stage Direction]
Motion agreed to.


Hon. Lionel Chevrier (Minister of Transport) moved: for leave to introduce Bill No. 377, to amend the Railway Act.


Mr. Graydon:: Explain.


Lionel Chevrier: This bill, which is to amend the Railway Act, together with the other two which follow, an act to amend the Canadian National-Canadian Pacific Act, 1933, and an act to amend the Maritime Freight Rates Act, are bills which have been drafted to meet the recommendations of the royal commission on transportation so far as the equalization of freight rates is concerned.
When we reach the second reading stage of these bills I propose to ask my colleague, the Minister of Public Works, to move that the bills be not now read a second time but that the subject matter thereof be referred to the standing committee on railways, canals and telegraph lines, with instructions that the committee shall consider the same and report thereon from time to time to the house.


Mr. Green:: Mr. Speaker, is it the intention that the standing committee should consider the subject matter of these bills during the present session, or at the fall session?


Lionel Chevrier: The committee on railways, canals and telegraph lines is the master of 80709-259a
its own procedure, and will decide what action it will take in connection with the bills.
Motion agreed to and bill read the first time.



CANADIAN NATIONAL-CANADIAN PACIFIC ACT REPORT TO PARLIAMENT TO GIVE INFORMATION CONCERNING CO-OPERATIVE PROJECTS

Lionel Chevrier: for leave to introduce Bill No.
378,	to amend the Canadian National-Canadian Pacific Act, 1933.
Motion agreed to and bill read the first time.



MARITIME FREIGHT RATES ACT


Lionel Chevrier: for leave to introduce Bill No.
379,	to amend the Maritime Freight Rates Act.
Motion agreed to and bill read the first time.



QUESTIONS

[Stage Direction]
POST OFFICE DEPARTMENT-.PUBLICITY AND PUBLIC RELATIONS Mr. Diefenbaker:
1.	How many publicity and public relations employees are in the Post Office Department?	*
2.	What has been the cost, month by month, for publicity and public relations, since the first day of May, 1950, and to date?

Mr. Couriemanche:: 1.	Were repairs made to the wharf at Cross Point, Bonaventure county, Quebec, between January 1, and December 31, 1950?
2.	If so, was the work done by contract or by day labour?
3.	If by contract, what was the amount thereof?
4.	Were tenders called for such work?
5.	If so, what are the names of those who tendered, and the amount of their respective tenders?


Mr. Fournier (Hull):: 1.	Yes.
2.	By contract.
3.	$11,582.25.
4.	Yes.
5.	Cap-t. J. Romeo Allard, $11,582.25; J. A. Dufour, $11,753.50; Arthur Bujold and Fortunat Bernard, $12,316.90.


PROVISION OF FEDERAL BUILDINGS IN ST. JOHN'S, NFLD.
Mr. Higgins:: What is the present position with respect to the erection or purchase of a federal public building or buildings in St. John's, Newfoundland?


Mr. Fournier (Hull):: Negotiations for the
acquisition of the sites for the two federal buildings to be erected are still under way. The purchase of the health laboratories building from the provincial government of Newfoundland is completed.


ESTABLISHMENT OF NATIONAL PARKS IN NEWFOUNDLAND
Gordon Francis Higgins: What is the present position with respect to the establishment of a national park or parks in Newfoundland?


Mr. Winters:: Mr. Speaker, when the estimates of the Department of Resources and Development were before the committee of supply on Friday, June 8, this question of the status of national parks in Newfoundland was dealt with. I think an answer will be found to the satisfaction of the hon. member at page 3866 of Hansard.


Mr. Speaker:: Answered.


ERECTION OF STORAGE SHEDS IN NEWFOUNDLAND
Mr. Browne (St. John's West):: 1.	Are storage sheds to be erected in Newfoundland? If so, where?
2.	How many are to be erected?
3.	What will be the cost of each?


Mr. Fournier (Hull):: 1.	(a) Yes; (b) Bay of Islands district and Burin district.
2.	Two.
3.	Not known until plans completed.
(Mr. Rinfret.l


REVENUE FROM SALE OF RADIO LICENCES
Mr. Fair:: 1.	During each of the calendar years 1945 to 1950, both inclusive, what revenue was derived from the sale of radio licences?
2.	During each of said years, what was the cost of collection?


Mr. Benidickson:: (Records are maintained for fiscal years only)
1.	1945-46	
$3,964,603.241946-	47	
4,099,795.141947-	48	
4,398,495.861948-	49	
4,670,342.651949-	50	
4,989,354.331950-	51	
5,076,997.962.	1945-46	
231,818.481946-	47	
237,503.971947-	48	
570,505.55
(including $326,695.25 commissions)
1948-	49	 611,918.76
(including $341,982.00 commissions)
1949-	50	 637,381.27
(including $331,652.20 commissions)
1950-	51	 657,779.82
(including $335,693.35 commissions)


HEALTH GRANTS-P.E.I.  LABORATORY SERVICES
Mr. MacNaught:: Has any contribution been made under the national health grants program to the development of laboratory services in the province of Prince Edward Island?


Mr. Martin:: Yes. The national health grants program has contributed $54,000 toward the expansion of diagnostic laboratory services in Prince Edward Island.
In order to decentralize the work of the provincial laboratory, branch laboratories have been created in eight hospitals throughout the province and trained technicians have been placed there to carry out medical and public health laboratory work. This organization will provide a much quicker and more reliable service to public health officials, as well as to hospitals.


HEALTH GRANTS-MENTAL ILLNESS RESEARCH
Mr. Rooney:: Has any contribution been made under the national health grants program for research into mental illness in the province of Ontario? If so, what was the amount of such contribution?


Paul Joseph James Martin: Yes. Over $150,000 has been made available to the province of Ontario under the national health grants program to carry out nineteen research projects related to mental health. The following are examples

of such projects: genetic aspects of psychiatry; biochemistry of central nervous system; physiological changes associated with emotion; electro-encephalographic investigation of psychopathic personality; enzyme studies of cerebrospinal fluid.



ARMED FORCES


Mr. Balcom:: What is the average current cost of drugs per diem per man while hospitalized (a) Royal Canadian Navy; (b) Canadian Army; (c) Royal Canadian Air Force?


Mr. Blanchette:: The estimated average
cost of medical supplies and equipment per man year in the Canadian armed forces is $14.01.



HEALTH GRANTS


Mr. MacDougall:: How much has been contributed to the metropolitan health centre of greater Vancouver under the national health grants program?


Paul Joseph James Martin: Over $253,000 has been allocated to the metropolitan health committee of greater Vancouver in order to expand its health services. Programs such as the following have been supported: mental health; tuberculosis home care service; community health education; public health education; audiometric testing in schools; public health nursing services; dental hygiene; nutrition services; food and milk control.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Higgins:: 1.	What is being done with respect to the former Royal Navy and Royal Canadian Navy properties in Newfoundland?
2.	Are they to be put back into service? If so, when?



MING SUNG INDUSTRIAL COMPANY


Mr. Pearkes:: 1.	Are any vessels of the Ming Sung Industrial Company of Canada trading under the Canadian flag with Canadian registration, between Hong Kong, Macao, Canton?
2.	If so, what is the nature of their cargoes?
3.	Do the officers of these vessels hold Canadian certificates?
4.	Do any vessels of the Ming Sung Industrial Company trade under the flag of the People's Republic of China?
Proposed Legislation FEDERAL DISTRICT COMMISSION



INCREASE IN NUMBER OF MEMBERS


Right Hon. L. S. St. Laurent (Prime Minister) moved: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to bring in a measure to amend the Federal District Commission Act, 1927, to increase the number of members of the commission from nineteen to twenty; to provide also that the commission may construct in the national capital district railways and related facilities and. for this purpose, acquire land and real property and enter into agreements with railway companies for the use, maintenance and operation of such railways; and to provide further for the payment of limited grants to the appropriate authorities in municipalities in respect of property situated therein and acquired for inclusion in Gatineau park.
He said: Mr. Speaker, both His Excellency the Governor General and His Excellency the Administrator have been informed of the subject matter of this resolution, and His Excellency the Administrator recommends it to the consideration of the house.


Some hon. Members:: Hear, hear.


Mr. Knowles:: Very good.


[Stage Direction]
Motion agreed to.


Alphonse Fournier: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to bring in a measure repealing parts I and II of the Dairy Industry Act and substituting therefor a new act intituled, the Canada Dairy Products Act, for the purposes of establishing national standards for dairy products and of regulating Interprovincial and international trade therein.
Provision is made for the appointment of inspectors, graders and other persons necessary for the administration and enforcement of the act.
He said: His Excellency the Administrator, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Louis Stephen St-Laurent: Mr. Speaker, following the question put to me yesterday by the hon. member for Kamloops (Mr. Fulton), I had inquiries
4068	HOUSE OF
Inquiries of the Ministry made and was informed that a telegram purporting to have been sent, collect, from Tranquille, had been brought to the Prime Minister's office, but, in accordance with the general practice of the office, we refused to accept collect charges.



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
Mr. Leon Balcer (Three Rivers):: I should like to ask a question of the Secretary of State. On Friday, May 18, I asked a question about some government contracts. My question is set out at page 10 of the order paper for that day. On Monday, May 21, my question was passed as an order for return. I should like to know when I may expect that return.


Hon. F. G. Bradley (Secretary of State):: shall make inquiries and endeavour to expedite the return.



HOUSING


[Stage Direction]
On the orders of the day:
Gordon Graydon: Mr. Speaker,
I should like to ask a question of the Minister of Resources and Development. Is it his intention shortly to announce government policy with respect to a federal plan for the building of houses in defence areas? I notice in the press-


Some hon. Members:: Order.


Gordon Graydon: -that that was suggested.


Robert Henry Winters: I can only repeat what I have said before, that the whole question of housing is under active consideration by the government, and that any decisions as to policy will be announced as they are arrived at.


Mr. Donald M. Fleming (Eglinton):: I should like to ask the minister if he is correctly reported in today's press as having said at London yesterday that no priority will be given in respect of building materials in favour of either public or private housing.


Robert Henry Winters: I have not seen the particular report to which the hon. member refers. What I did say yesterday in London was that no system of priority had been arranged for the program contemplated under section 35 of the National Housing Act.



CIVIL DEFENCE


[Stage Direction]
On the orders of the day:
Gordon Graydon: May I ask the
Minister of National Health and Welfare, under whose jurisdiction civil defence now comes, whether the municipalities across Canada have been circularized, or whether there has been communication with them, asking how much money they will require and what equipment they will need in connection with the civil defence plan. I ask this because of his director having said that there is no response from the municipalities.


Paul Joseph James Martin: The hon. member knows that the municipalities would report directly to the provincial governments. Municipalities are the creatures of the provinces. I know that such negotiations are now going on.


Gordon Graydon: That is not what your director says.

The house in committee of supply, Mr. Beaudoin in the chair.



DEPARTMENT OF DEFENCE PRODUCTION

[Stage Direction]
76. Departmental administration and payments to Canadian Commercial Corporation and other corporate agencies for services provided in connection with' defence purchasing and1 production, $5,000,000.
Howard Charles Green: Is it the intention of the
Minister of Defence Production to make a statement?
Right Hon, C. D. Howe (Minister of Defence Production): Mr. Speaker, I have in mind making a statement of some length. This department has been in existence for only two and a half months and, if the committee will bear with me, I shall give a complete statement on the work of the Department of Defence Production.
Last March, in introducing the bill to establish the Department of Defence Production, I outlined the organization and functions of the proposed new department. I now intend) to review what the new department has been doing in the two and a half months we have been in operation. I propose to say a brief word on the organization, and then to refer to some general matters that affect the over-all operations of the department.


Mr. Low:: Mr. Chairman, I beg the minister's pardon for interrupting him at this point, but I would ask that the chairman of the committee call order so that we may hear the minister's words.


The Deputy Chairman:: I was just about to do so. I thank the hon. member for Peace River for having called attention to the disorder which prevails in several parts of the chamber. We have not yet the benefit of the amplifying system; therefore in order that we may be able to hear the statement which is being made by the Minister of Defence Production, we must have silence in the chamber.


Mr. SI. Laurent:: And even behind the curtain.


Mr. Howe:: The suggestion is that we have silence behind the curtain as well as in the chamber.


Some hon. Members:: Hear, hear.


Clarence Decatur Howe: To continue my statement, from then on it will, I think, be convenient to deal with the different programs which we are carrying out in the various divisions of the three main branches of the department: the production, general purchasing and materials branches. I will begin with the organization of the Department of Defence Production.
I have arranged for hon. members to receive copies of the organization chart of the department. I hope this will be of assistance to them in the consideration of the estimates and the work of this department.
When the department was established on April 1 of this year the majority of the staff was recruited from the government service, chiefly from the Department of Trade and Commerce and from the Canadian Commercial Corporation. A number of employees have also been drawn from sections of the government service that have been discontinued or are cutting down on staff, such as the wartime prices and trade board, emergency import control divisions, etc.
As I mentioned last March, we have also recruited men from industry to head up a number of divisions and to provide the technical knowledge that is so essential to the job we are trying to do. You will recall that under the Defence Production Act the minister may make appointments outside the normal procedures of the Civil' Service Act. However, relatively few appointments have been made in this manner, and where it has been done, it has been used chiefly to secure specialists from industry; and in most cases these persons are serving without government salary. At the time of its inception there were 871 persons employed in the new department, and three-quarters of them came from the Canadian Commercial Corporation. By June 1 the staff had increased to 1,120.
Supply-Defence Production This figure is exclusive of crown companies, such as Defence Construction Limited, Canadian Commercial Corporation as it is now constituted, etc.
In addition to the offices at headquarters in Ottawa, the department has offices in the leading cities of Canada, and also in Washington and London. The department has taken over the district offices formerly operated by the Canadian Commercial Corporation, but in Toronto and Montreal the office accommodation was insufficient to meet the expanded needs of the new department, and other quarters have been leased. Headquarters of the petroleum and machine tools divisions and the wool division of the Canadian Commercial Corporation are located in Toronto; the chemicals and explosives division and the pulp and paper division are in Montreal. Other divisions of the department are also represented in these two cities, and in each case there is an office manager to co-ordinate the administrative work in these two centres. As space was limited in the Canadian embassy in Washington, it was necessary to move the department's office to new quarters on June 1.
In the Washington office we have on-the-spot representatives for the different divisions of the department that have a direct interest in what is happening in the United States priorities field.
To avoid duplication of effort, arrangements have been made to use trade and commerce officers and facilities in London, England, and also at St. John's, Newfoundland, and Vancouver, British Columbia. In each case it was found that the interests of the two departments were sufficiently close to warrant such a course and that it was unnecessary at this time to set up separate offices.
Turning now to some of the problems with which we are dealing, I think I should start with the question that first arises in connection with the wide variety of things that are required by modern armies, navies and air forces. Should these items be produced in Canada, or obtained from other sources of supply? In many cases it has not been easy to arrive at these decisions. A number of factors are involved. As you know, a decision has been taken to adopt United States type equipment for our army. This means, in many instances, that before we can make production decisions we must secure rights to manufacture from the United States, as well as plans, specifications and bills of material. Frequently we must also secure special security clearances for departmental officials or Canadian industrialists to visit plants in

Supply-Defence Production the United States in order that they can study special production problems at first hand.
In the beginning we found that the securing of the necessary rights to manufacture, the specifications, and access to production sites was a time-consuming process. Naturally there are reasons why this might be so. The rights of private industry, as well as government proprietary rights, are involved. The security of highly classified material must be adequately safeguarded. I am satisfied, however, that we have now worked out with the United States authorities procedures which will facilitate and accelerate the release of the rights and information which we require.
Another factor is our limited requirement for military end items in certain fields, which does not make it practical to undertake Canadian production if we would only be filling our own orders. In some instances we feel that because of special circumstances our production would be particularly efficient, and in such cases we attempt to interest the United States in our production facilities. According to our agreement on economic cooperation, signed by Canada and the United States last October, we are pledged to utilize the combined production facilities of our two countries to the best possible mutual advantage.
There are, of course, certain cases where, despite limited Canadian requirements and lack of United States orders, we feel that it is important that we initiate production in this country. The reason for such a decision is that we feel that if a war should develop, we would have immediate need of heavy production in certain fields, which could not be brought into being unless we establish a nucleus now. This entails partial tooling up, training key production personnel, and studying new production techniques. In some instances, in order to get better production runs, we have offered to make some of our output available as mutual aid to our NATO allies, financing the production from funds voted by parliament for this purpose. I might add that we do not make such offers unless we are assured by the defence production board of NATO that such supplies would help meet a real deficiency which could not be adequately met from European production. Examples of items which we are now offering to NATO countries from current production include 155 millimetre howitzers and other artillery items, as well as certain radar and other electronic equipment.
So much for the questions involving decisions as to what to produce in this country. When a decision has been made to build a
IMr. Howe.]

certain type of aircraft or a certain type of ship, certain types of armament or any other complicated piece of equipment, we are faced with establishing the necessary facilities.
In most cases existing plants have to be largely rearranged or new plants built, machine tools have to be purchased and production tooling and setting up expenses incurred. In some cases it is advisable to establish these facilities with capacities greater than our immediate requirements, as a measure of insurance. We have two basic policies that we follow in dealing with these cases. If industry will put up its own money we offer them accelerated depreciation so that they may reduce the value of their investment to a reasonable figure in the event that the facilities are not required for the original purpose and have again to be converted. I might add the obvious fact that, if the facilities are required by the government after they are written down, the government receives the benefit, as the assets can only be depreciated once. If it is not possible to persuade industry to advance its own money on terms satisfactory to the government, we provide the facilities through direct capital assistance, but in that case we retain title to the assets. Sometimes one course seems advisable, sometimes the other, and on rare occasions some combination of the two.
To date we have concluded arrangements for accelerated depreciation in three cases. We have five formal applications under study, and nine or ten others in the early discussion stage. Because so many of these cases have not yet been settled, I cannot give the house much in the line of figures as yet, but the three settled cases involve assets to the value of approximately $1,500,000. The formal applications before us involve assets valued at approximately $20 million.
In capital assistance we have projects in various stages of completion which will ultimately aggregate $107 million, only part of which, however, will be spent in this fiscal year.
One further matter that I might mention in dealing with the estimates is the department's revolving fund. This of course is a statutory vote, and was discussed at some length when the Defence Production Act was being debated. However, because of the importance of this vote, I should like to advise hon. members of the commitments which we have entered into and have financed through the revolving fund. To date a total of $74 million has been allocated from this fund to provide for the purchase, and resale, during the year of textiles, wool,

strategic materials, shipbuilding, and ammunition components, to the value of some $250 million.


Howard Charles Green: That has nothing to do with
the money advanced by way of capital assistance?


Clarence Decatur Howe: No. These are simply payments which will be recovered later when the finished product is disposed of.
I turn now to the various individual programs. It is perhaps appropriate to start with the aircraft program, because it is the largest. It is in this field that Canada has demonstrated its ability to compete with other countries, and it is in aircraft production that we can make a major contribution, not only to our own defence effort but to that of our allies. The aircraft division has already placed contracts amounting to over $400 million, and a number of programs are well under way.
After spending years in research and development work on the CF-100 jet fighter and its Orenda engine, Avro in Toronto will be in production this fall. Deliveries of this aircraft will depend on how soon the new engine plant under construction at Malton can produce Orenda engines in quantity. In Montreal the F-86 Sabre is now in quantity production, with output limited only by the number of engines and complementary equipment imported from the United States. The Harvard training plane is being built in Fort William, and it is planned to produce its engine, propeller and other components in Canada as well. It is noteworthy that this will be the first time that complete aircraft have been built in this country with all components Canadian made. If is expected that Canada may be able to supply the United States and commonwealth countries with their requirements for this aircraft and its spare parts. As you know, the Canadian Beaver was chosen by the United States authorities in competition with eight United States aircraft manufacturers, and orders have been placed for 109 planes to be used by the United States air force. A further and larger order is expected.
I have just recently received word that Canada will participate in the production of the United States air force twin engine trainer, the Beechcraft T-36A. Negotiations are not yet completed, but plans are also under way to produce in Canada the Lockheed T-33 dual controlled jet trainer.
The division is also engaged in placing orders and arranging for the production of a number of components required by the aircraft industry. Another important phase of its work is the allocation of orders for
Supply-Defence Production maintenance and repair of aircraft. For some years it has been the government's policy to allocate this work to various sections of the country in order to ensure that adequate repair and maintenance facilities are strategically located across Canada. At the present time we have repair and overhaul requisitions from the R.C.A.F. amounting to approximately $35 million, with some programs extending over two years.
We now come to the electronics division. This is one field in which Canadian production will make a substantial contribution, not only in producing for our own requirements but also for the requirements of the United States and our NATO allies. A great deal of research has been carried out by the defence research board, the national research council, and industrial research workers as well as universities, and it is hoped that much of this research can be carried through the development field and into the production field in order to meet allied military requirements. It is difficult to describe major electronics projects because of their complexity, variety and interrelation with the aircraft, shipbuilding and other programs.
Our present electronic program for the armed services is already under way and will eventually total more than $400 million. As about one-quarter of the program has been placed with prime contractors, the impact of this work on subcontractors will soon be felt.
A third division is the shipbuilding division. As has been announced, contracts have already been allotted by this division for one icebreaker, fourteen minesweepers, fourteen escort vessels and five gate vessels, as well as a number of harbour craft. It is expected that this program will amount to approximately $200 million.
These are new types of minesweepers and escort vessels of which no prototypes are yet afloat. This means that certain capital assistance is necessary, and that some delays and difficulties at the shipyards may be expected from time to time. Although Canadian shipbuilding costs are somewhat higher than European costs, it has been government policy to maintain key personnel and essential equipment in all our major Canadian yards for strategic reasons. The growth of this program is shown by the employment figures in the shipbuilding industry: October, 1950, 8,440, and April, 1951, 12,147.
In addition, I released a statement last week which referred to the conversion and refitting of thirty-four ships. This is a two-year program, and includes eighteen minesweepers and sixteen frigates. The

Supply-Defence Production shipbuilding division is also developing the production of propulsion machinery and auxiliary equipment.
Another division is the ammunition and gun division. The general remarks which I have already made concerning problems in our production program are particularly applicable to the work of this division. Nevertheless some pieces of equipment and kinds of ammunition are now planned for production in this country. For example, 60 millimetre and 81 millimetre mortars of United States design will be manufactured here. These will replace the 2-inch and 3-inch mortars used previously. In addition, the 3-5 inch rocket launcher anti-tank weapon, replacing the Piat as a standard, will be made in Canada. In artillery the American 105 millimetre and 155 millimetre howitzers will now be standard weapons replacing the old 25-pounder and the 5-5 inch howitzer. Both guns will be made at the Sorel plant, which is also engaged in the production of the 3-inch 50 calibre naval gun for the United States and Canada.
Ammunition for the types of small arms and artillery which we have adopted will be produced in Canada. At the moment the bulk of the ammunition and small arms program is being carried out by Canadian Arsenals Limited, and the howitzers and naval guns are being made at Sorel.
Yet another division is the mechanical transport division. The present program in mechanical transport is small relative to our contribution to allied requirements during world war II. On April 27 I released a statement in which I advised that preparations were being made for the partial manufacture and complete assembly of 456 three-quarter ton military trucks and 780 two-and-a-half ton military trucks by Chrysler Corporation of Canada Limited and General Motors of Canada Limited, respectively. I pointed out at that time that full tooling and production to meet the limited requirements of the three Canadian services is out of the question at present.
The possibility of securing United States orders for our Canadian factories was carefully examined but there is excess capacity in that country for producing these types of vehicles. Nevertheless we were satisfied that some production must be undertaken in Canada in order to encourage the production of components in this country and to ensure the highest possible Canadian content in these vehicles. It is also important to make arrangements for some tooling up in Canadian plants and to give Canadian industry an opportunity to become familiar with these types of vehicles. Since my announcement

the Ford Motor Company of Canada has been studying the possibility of Canadian production of the one-quarter ton four by four jeep. It is expected that these engineering studies will be completed very shortly.
The machine tools division has been established to ensure that there is available to every production project, such as the manufacture of aircraft, radar, guns and ammunition, shipping, etc., an adequate supply of machine tools and the necessary allied equipment. This division has started on a three-year, $40 million machine tool purchasing program. Of this amount, it is estimated that $12 million will be spent in Canada, $4 million in the United Kingdom, and $24 million in the United States. In addition, an attempt is being made to rationalize the Canadian machine tools industry in order to achieve an increase in output and efficiency by having certain plants concentrate on the production of specific sizes and types of machines. In this way we avoid duplication of effort and at the same time achieve manufacturing economies.
Defence Construction Limited, which is a crown company set up as part of the production branch, is responsible for construction required by our armed forces. By the end of May, Defence Construction Limited was administering contracts with a total value of $110 million, of which $44 million worth were taken over from the Canadian Commercial Corporation. Defence construction requirements have increased sharply in recent months, and the present rate of contract awards exceeds $4 million per week. It is estimated that by the end of the current fiscal year Defence Construction Limited will have under administration over $200 million in construction contracts. Such an extensive program is making heavy demands on critically short materials, particularly reinforcing steel.
The last division of the production branch is the small industries division. Briefly, the functions of this division are to gather and distribute information on contracts so that subcontractors can get in touch with the prime contracting firms quickly for possible orders; second, to inform prime contractors of available industrial capacities as needed; and third, to act as a representative in Ottawa of small industry across Canada for whatever problems may arise in its dealings with the defence production department. In order to ensure close liaison with small industry, it is planned that this division will have representatives in the department's offices in Toronto and Montreal. The division will have special maritime and prairie province liaison officers on its staff in Ottawa, with

the understanding that these individuals will spend considerable time in their respective territories. It is also planned to work closely with industry in British Columbia and Newfoundland through the Department of Trade and Commerce offices in Vancouver and St. John's. We are anxious to see that every section of Canada, and small industry as well as large, has an opportunity to participate in our defence production program.


An hon. Member:: Saskatchewan, too?


Clarence Decatur Howe: Well, we do not buy much wheat in New Brunswick and we do not buy many munitions in Saskatchewan.
Another main unit of the department is the general purchasing branch which is carrying on most of the work of the former Canadian Commercial Corporation. It is responsible for purchasing all the defence supplies outside the field of those for which production divisions have been created. These cover a wide range of commodities and include such things as hardware, barrack stores, fuel, photographic equipment, medical supplies, food, petroleum products, etc. The branch also places contracts for repair and maintenance work on national defence property.
One of the largest programs being handled by the general purchasing branch is in the clothing and textile field. It is expected that about $150 million will be spent on uniforms, blankets, boots and other items needed by the armed forces in the current fiscal year. Because of the size of this program the government, after consultation with the textile industry, decided to proceed with the orderly placing of contracts for about half of the woollen textile requirements. To ensure sufficient wool to meet this volume of orders before the fall sales open in Australia and New Zealand, the wool division of the Canadian Commercial Corporation has already ordered 7,100,000 pounds of raw wool and tops. This in turn, will be sold to mills manufacturing fabrics and blankets for military use. In this way it is hoped that there will be no undue disruption of civilian requirements in the textile field, and at the same time the defence program can move ahead in an orderly fashion. In the case of cotton goods, industrial demands are heavy, and as Canadian mills are finding it difficult to fill all our defence needs a good deal of yardage will have to be purchased outside Canada if we are to avoid heavy impingement on the civilian market. Synthetics are being incorporated into cotton and woollen fabrics with excellent results, and this is particularly useful in view of present shortages and high prices of natural fibres.
The majority of contracts awarded by the general purchasing branch are placed as a
Supply-Defence Production result of competitive tenders. In certain cases, however, contracts placed by the branch have been allocated throughout industry. This has usually been done because of delivery requirements and the quantities needed, and to make sure we were not placing too heavy a burden on a limited number of manufacturers. For instance, orders are being placed for one million pairs of military footwear with firms located throughout Canada, in order to make the best use of open capacity. Many supplies are bought and services contracted for in the area where the armed forces are located, and purchases of these items have been made from coast to coast by district purchasing offices.
The suggestion has been made recently that there is something unfair about the way in which defence contracts are being awarded to the different provinces; and I refer especially to our friend from Moose Jaw. For example, it is claimed that Saskatchewan is not getting its reasonable share of the defence program. Before commenting on this, I would like to emphasize the fact that capacity for making defence goods is not spread evenly over the country. Modern weapons are made in specialized factories by skilled workers, and it is a basic fact that the bulk of Canada's potential for making munitions is in Ontario and Quebec. It is not necessary for me to dwell on the economic influences which have brought this about, but the fact remains. It is true that the volume of defence contracts for such things as aircraft, military vehicles, weapons, ammunition and electronics will be relatively small outside the central provinces.
However, when other military purchases are examined the provincial distribution seems to be quite reasonable. Not counting the items just mentioned, the prairie provinces got defence contracts in the last fiscal year amounting to about $25 million, or nearly 13 per cent of total contracts let in Canada for these items. When account is taken of the fact that the net value of manufacturing in the prairie provinces was only about six per cent of the total in the latest year for which figures are available, the prairies appear to have done rather well.
Particular reference has been made to the lack of defence contracts in Saskatchewan, and I want to outline some recent developments to correct the mistaken impression that Saskatchewan is being left out of the defence program.
In the month of April of this year, defence orders worth nearly half a million dollars were placed by the Department of Defence Production in Saskatchewan. In May, Defence Construction Limited awarded contracts for
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Supply-Defence Production over $4 million for work in Saskatchewan, and there are other defence contracts which are now being tabulated. Mention should also be made of the expenditures in this fiscal year by the Department of Transport on behalf of the Department of National Defence for landing strips and runways in Saskatchewan.
It is planned to spend $965,000 for military landing strips and runways, and another $440,000 for similar civilian facilities. Such direct government expenditures do not fully reflect the impact of the defence program on Saskatchewan. For example, Eldorado Mining and Refining Limited plans to spend about $2 million this year on uranium production in Saskatchewan. This is not a part of the government's defence vote, but it is a defence expenditure which will contribute substantially to employment and income- in that province.
Before concluding my references to the general purchasing branch, I should just like to say a few words about the Canadian Commercial Corporation. As I mentioned at the beginning, most of the personnel of the old Canadian Commercial Corporation has been absorbed into the department proper. However, the government has decided that it would be useful to maintain the corporate entity of Canadian Commercial Corporation, although its staff has been reduced to approximately twenty-five. The main task of the Canadian Commercial Corporation, as now organized, is to act as a purchasing agent for foreign governments securing supplies in Canada. It will also be used by the government for the purchase of strategic and other materials for stockpile.
One of the most vexing problems facing us today is the over-all shortage of strategic materials. Before referring to what we are doing in this field in Canada, I might mention some of the international studies that have been made or are being made.
For some months the organization for European economic co-operation has been devoting considerable time to this question, as has the North Atlantic treaty organization. There have been special rubber and tin conferences, and at the last meeting of the commonwealth prime ministers it was agreed to extend the terms of reference of the commonwealth liaison committee so that this group could keep the special commonwealth aspects of the raw material situation under review. I might explain that the commonwealth liaison committee is a standing committee composed of all the commonwealth high commissioners in London, and includes senior representatives of the appropriate United Kingdom ministries.


However, the most important work currently being carried out in the materials field is being done in Washington by the international materials conference. This conference is organized into a central group with a number of commodity committees. The central group's main responsibility is to select the commodities that are to be studied, and to invite the countries which are the principal producers and consumers of the selected commodities to establish commodity committees. The central group includes Canada, the United States, the United Kingdom, France, India, Italy, Brazil, Australia, and a representative from the OEEC and a representative from the organization of American states. To date, the central group has established the following commodity committees: wool; cotton; sulphur; tungsten and molybdenum; manganese, nickel and cobalt; copper, lead and zinc; and pulp and paper. All these committees have similar terms of reference, and, in general, these are: (1) to establish as accurately as possible the supply and demand position; (2) to encourage increased production; (3) to stimulate conservation and substitution wherever possible; (4) if it is apparent that there is an inevitable gap between available supplies and essential requirements, to recommend reallocations of supplies. It should be noted that these committees have authority only to recommend redistribution of supplies to governments.
The work of the international materials conference is for the most part in its early stages. They have made only one recommendation, which was that North America ship 3,000 tons of newsprint to France. However, I shall say more about that later.
As a country which is one of the most important exporters of many strategic materials and a significant importer of others, Canada has been active in nearly all the commodity committees. Because North America controls a large share of the free world supplies of scarce materials, I welcomed a statement released on May 29 by United States defence mobilization director Charles E. Wilson, in which he outlined a set of priority principles designed to assure supplies of scarce materials to the United States and her allies. I say I welcomed this statement because it is one in which we can readily concur. It is completely in line with the instructions which we have been giving our representatives on the international materials conference for the last few months. In his statement on guides to be followed in allocating resources devoted to foreign needs, Mr. Wilson stated in part:
When there are competing requirements of similar high essentiality in terms of over-all objective,

allocations policy should attempt to satisfy such requirements according to the degree to which they will contribute to the following results:
(a)	military production of the free world, and direct support for the expansion or improvement thereof;
(b)	promotion of increased supplies of all materials essential to strengthening the free world, and in particular the production and acquisition of those materials required for the current mobilization effort;
(c)	maintenance and necessary expansion of essential services and production facilities, and maintenance of minimum essential civilian consumption requirements in the free nations, and in areas which they control.
Mr. Wilson went on to say:
Allocations form part of a wider give-and-take among the free nations. Among the countries sharing in such allocations the principles of selfhelp, mutual aid, and similarly effective application of internal policies governing the allocation and use of scarce materials should prevail.
After requirements of high essentiality have been met, the inter-country allocation of remaining supplies should take into account the effects upon the respective civilian economies of the broad contribution of each area or country toward common defence, in direct military production or in increased' political and economic strength, including the common aid of controlling inflation of world prices. Individual countries differ widely in their ability to make such contributions; the objective should be to bring about an equitable distribution of the resulting burdens and sacrifices. This objective clearly excludes any mechanical formula, or any mere levelling down to a uniform standard of lowered' consumption.
The foregoing principle is admittedly difficult to apply, since standards of consumption in different areas of the world are determined by a complexity of factors, such as normal levels of real incomes, customs, cultures and climate. But its application is of high importance for the attainment of the over-all objective of economic strength and morale in the free countries.
To return to the Canadian scene, I think the most orderly way to discuss our materials situation would be to review the work of the materials branch. The problem of short supply in relation to rising Canadian and world demand affects the work of the six divisions of the materials branch.
In the steel division the task is twofold: to facilitate increased supplies, and to make sure that preference is given to essential requirements. This year, as a result of a rise in production and an increase in imports, we have had more steel in Canada than we had last year. But the demands of Canadian users have increased much more sharply, with the result that we still have a tight supply situation. While the expansion plans of the Canadian steel industry are an encouraging part of the picture, we shall still have to obtain substantial quantities of steel from outside sources to meet our own defence needs. An important task
Supply-Defence Production assumed by the steel division is to demonstrate these needs to the United States authorities in order to have steel released to Canada.
In order to ensure the best possible distribution of the steel that is available in this country, limitation orders have been placed on certain non-essential types of construction. Last January the supply of steel for certain types of less essential building was restricted, and these restrictions were extended to additional types of buildings in March. In recent months the requirements of steel for defence projects have increased sharply, and we are now faced with a critical situation with respect to supplies of reinforcing steel, plates and structural steel. It has, in fact, been necessary to direct Canadian mills to defer shipments of less urgent projects. In co-operation with the priorities division every effort has been made to obtain increased supplies from the United States. I am pleased to be able to tell you that our representations have been well received in Washington. However, in spite of this, defence requirements are so large there will be only limited quantities of steel available during the next few months for projects that are not closely related to the defence effort.
The non-ferrous metals division has also been faced with the problem of increasing production and making sure that defence needs receive first claim on materials in short supply. In the case of some of the more common metals produced in Canada-copper, lead, zinc, nickel and aluminum-expansion of production by the industry has enabled us to meet essential demand in this country, and at the same time, keep up our exports to our traditional customers. Special steps have been taken to increase our own supplies of some of the less common metals, and I thought that hon. members might be interested in some of these measures.
In the case of tungsten, the government is erecting a 230-ton mill at the Emerald property in British Columbia which should be in production late this year. Under contract for export to the United Kingdom, the Red Rose property, also in British Columbia, is being put into production by the owners.


Howard Charles Green: Tungsten?


Clarence Decatur Howe: Yes. In addition, the Hollinger mine, and possibly some of the other gold operations, are planning to undertake the recovery of scheelite, one of the tungsten ores, in order to supplement supplies obtained from the United States. Every effort is being made to obtain our requirements of molybdenum from traditional sources in the
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Supply-Defence Production United States. However, impending shortages have resulted in further restrictions on United States consumers, which will have a corresponding effect in Canada. To meet this situation, negotiations are now under way to reopen the La Corne mine in Quebec which was a producer during the last war.
In the case of cobalt, an incentive price schedule was announced last February, and the Deloro Smelting and Refining Company was appointed as the government's buying agent under this bonus price plan. The company's smelter facilities will be used to convert into metal the ores and concentrates purchased under the plan. I might say that this plan is producing results.
As a further step in increasing our supplies of essential materials, stocks of tin and antimony were purchased some months ago, and further purchases are now under consideration. Arrangements have also been made to obtain quartz crystals from Brazil, and steps are being taken to explore a Canadian source of this scarce material. Reasonably good stocks of manganese and chrome ore are being maintained by the Canadian consumers of these minerals.
A long list of metals and minerals has been declared essential under the Defence Production Act. The informal "producer ration" system that was in effect earlier in the year has now been replaced by an "order-approval" system for such metals as nickel, copper and aluminum. Similar orders covering lead, zinc and cadmium will be issued shortly. Through these orders we hope to regulate the rate of metal consumption for commercial purposes in order to support our expanding defence program. The operation of these orders will also prevent surplus buying to build up abnormal inventories. This "order-approval" system was eery effective in the last war. Because of its flexibility, we feel we will be in a much better position to meet changes in over-all supply and demand, and in the United States priorities picture, than we would be if a more rigid system were adopted.
In the chemicals division, efforts are being made to assist industry with some of its supply problems and in arranging the mechanics of handling Canadian requirements for chemicals and chemical equipment to be secured in the United States. As a first step, a number of chemicals were placed on the essential list under the Defence Production Act. So far, it has been possible to work out satisfactory arrangements without formal control. However, in view of proposed international allocations, it will be necessary to place sulphur under control in the near future.


The continuing shortage of sulphur is a problem that is not confined to Canada, and, as part of our contribution to the over-all situation, every effort is being made to reduce our dependence upon the United States sources of elemental sulphur. Plant expansion has been approved to increase production of sulphuric acid in this country, as well as new capacity to produce elemental sulphur from natural gas in Alberta and liquid sulphur dioxide from the operations at Copper Cliff. Studies are also being made to increase our production from smelter gases and pyrites.
Expansion is taking place in other parts of Canada's heavy chemical industry, and many new chemical processes are being planned in this country for the first time, including the manufacture of nylon intermediates, polyethylene for plastic and electrical insulation, cortisone, and important new petrochemicals, the latter in Alberta. Altogether, priority assistance has been given for expansion amounting to more than $150 million.
On the supply side, arrangements have been made with the United States for the allocation of chemicals to Canada, with distribution to be made where necessary under the direction of the chemicals division.
The development of the oil resources of Canada has assumed new importance with our defence program placing increasing demands on available supplies. The petroleum division is doing everything possible to increase our own production and to work out with the United States authorities a satisfactory distribution of North American supplies. Since the division has been in operation, a survey has been made of tubular steel requirements in this country and a system of allocation set up to fit in with United States procedures. Canada was granted an allotment of 13,000 tons of steel for the oil industry for the third quarter of 1951, and distribution of this will be supervised through the Calgary office. A system of reserve supply depots, and the method of withdrawal from these depots, have now been established and will go into operation on July 1.
The division has also worked out, in co-operation with the United States authorities, a system of allocation of tetraethyl lead to Canadian refiners in order to conserve supplies and build up inventory. In addition to a number of surveys on the supply and consumption of certain petroleum products, the division has given assistance to the industry in obtaining materials for urgent projects already under way.
Some weeks after the department was in operation it was decided to establish a pulp

and paper division. The main reason for this move was the likelihood of some international allocations being recommended by the international materials conference.
The pulp and paper committee of this conference has now recommended one allocation of newsprint to France and it is possible that there will be others during the next few months. I think that no one will quarrel with the desirability of North America assuring that our allies have at least minimum amounts of newsprint available in order to combat the claims of communism. It seems that in the free countries where communism is the greatest threat, the communist papers in one way or another get newsprint. It is important that we ensure that the free press of these countries also secure supplies.
As I mentioned, the international materials conference has recommended an emergency allocation of 3,000 tons of newsprint to France, 2,500 tons of which is to be supplied by Canada. I have, under the powers granted me by the Defence Production Act, instructed the director of the pulp and paper division to make an equitable levy on all Canadian newsprint producers for the purpose of providing the aforesaid 2,500 tons of newsprint. This purchase will be made by the Canadian Commercial Corporation, on behalf of France, at prices not inconsistent with contract prices prevailing in North America, but having regard to any additional costs involved in this transaction.
I do not believe that it will be necessary to divert a large tonnage of newsprint from North America in order to satisfy these emergency requirements, but with our mills already over-committed it is obvious that North American users, who are by far the heaviest consumers of newsprint, must expect some cutback in order to provide this tonnage. Every precaution will be taken to requisition in such a way as to minimize the impact on producers and consumers in this country.
I have left the priorities division to the last because so much of its work cuts across that of other divisions in the department. One of the major tasks of the priorities division has been to see that Canadian requirements on the United States economy are fully recognized when it comes to the allocating of materials, components, and productive capacity by the United States authorities. So far, the single band "defence order" priority rating system has been used in that country, and its use has been extended to include defence-supporting and essential civilian requirements in addition to defence contracts, This has placed undue pressure on the defence order system, and plans are
Supply-Defence Production being made in the United States to introduce a controlled materials plan to regulate material requirements in a more equitable manner. There has been a good deal of delay and: uncertainty about the controlled materials plan in the last few weeks, but I would like to say at this time that Canadian officials have done everything possible to try to minimize the effect of this on Canadian industry.
Some of the difficulties have arisen from the fact that decisions on policy implementation and operations have not been forthcoming from the United States national production authority in sufficient time to meet the original plans, and a great deal of confusion at the industry level has ensued. Canadian firms have been subjected to misinformed requests from their supplying firms south of the border. A number of stop-gap methods have been employed in national production authority to avoid dislocations in important defence supporting industries, and in general we have been successful in arranging for parallel measures to be applied to the corresponding Canadian industries in respect to their United States supplies. For example, there is conflicting advice as to what steps will be taken in connection with the truck manufacturing industry in the United States. The necessary information has been obtained from the Canadian automotive industry, so that their priority interests can be protected quickly, no matter which way the situation moves in the United States.
During this unsettled period, it has been most difficult to put in final readiness the rather comprehensive administrative procedures which will be necessary, assuming that controlled materials plan comes into full operation in the United States. It would seem most inadvisable to put any method of operation before Canadian industry until such time as we can be sure that it affords at least a relatively satisfactory short-run basis of operation.
My colleague, the Minister of National Defence, has described in some detail the program of the armed services. It is the role of the Department of Defence Production to ensure that the armed services have the equipment and supplies that they require. In the remarks which I have just made, I have indicated how the department is organized to procure these supplies. I have referred to the three main branches of the department and to their various programs. I have touched briefly on our activities in the international field. I have mentioned some of the inducements which we are using to encourage production in Canada of articles or commodities that are needed for the

Supply-Defence Production defence program. I have said previously in this house, and in other public statements, that I am satisfied that we can fulfil the program on schedule. I have admitted that we could not carry out this task without the complete co-operation of Canadian industry, but that is a co-operation which we have enjoyed in the past, and I have no doubts as to the role that Canadian industry will play in the future.
There is another important element in the defence production program, and that is manpower. We have a tight manpower situation. As civilian producers, with exceptionally heavy stocks, run into consumer resistance, they may find it necessary to cut back staff. I am satisfied, however, that such personnel will be absorbed quickly into defence or defence-supporting industries. There will be minor dislocations, but I am satisfied that there is sufficient labour of the right kind in Canada to support our defence program as well as a flourishing civilian economy.


Mr. Drew:: Mr. Chairman, I feel sure all hon. members will welcome the minister's comprehensive review of the organization of this new department, and the plans it has under way for the expansion of our necessary defence production. In effect, the extensive and complete analysis by the minister of the work of his department constitutes what might ordinarily be described as a white paper on that subject.
Quite apart from any discussion we may have later in regard to details, the review is one which places clearly before us and before the people of Canada the general organization of the department and the nature of the activities that are being undertaken. I am satisfied that all hon. members-at least I hope they will-agree with the minister as to the capacity and the ability of our industrial organization, both at the management and the workers level to meet the production demands which are being set as the target of the plans of this department.
The minister has explained the concentration of production in the two central provinces. He has indicated that to a certain extent this is made necessary by the experienced management and technical skills possessed by the workers themselves, which have been built up over many years, and that it is necessary to make use of those skills. On the other hand I would point out that much of the production will be in completely new lines. I can understand the necessity for using existing skills in relation to production which is already under way. But in new types of production every effort should be made to decentralize that production and to locate the new plants in those parts of Canada which


up to the present have not been called upon to accept the responsibility for any substantial part of our defence production.
I believe there is a reason for that which goes beyond either the desirability of decentralization as a principle in itself, or the very reasonable request that is made by the provinces to the east and the west of the central provinces that they have a share of the employment and production which is paid for out of the common funds raised by taxation from all the people of Canada. That additional reason, I suggest, is very important.
Unless there is decentralization it becomes necessary for many people to move from the maritime provinces or the western provinces to central Canada simply because of the expanded requirements for employment in those areas. That means, first of all, the movement of people, under the compulsion of employment, to places other than the communities in which they have lived and in which their intimate associations have been established.
What is still more important is that in a great many instances it means the necessity of leaving the homes they have built up in those communities which they have chosen as the communities in which they wish to live. This being so, I think it will be to the advantage of Canada, and add to the satisfaction of the people and to the generally favourable employment conditions of the workers, if, so far as possible, new production should be moved to the locations in which the workers are living rather than to new locations of employment.
1 repeat that I recognize the weight of the argument that in some types of production, where long-established skill is necessary, it follows naturally that there must be an expansion of existing production. On the other hand, in relation to all new types of production every effort should be made to establish plants in Newfoundland, the mari-times and the western provinces, knowing as we do the ability of our people to adapt themselves to new undertakings.
After all, we learned during the last war that people from every part of Canada had an extraordinary capacity to adapt themselves to new skills and new types of production. We had never made anything like radar before in this country, and yet our radar equipment, manufactured not only by people native to the central provinces but also by people from other parts of Canada who came to those central provinces, became recognized as the equal of any radar equipment made anywhere else in the world. I mention radar because undoubtedly in the field of electronics as well as in the field

of general production it calls for as high a measure of skill as could ever be required.
Since men from the maritimes and western Canada were able suddenly to adapt themselves to this type of work in plants in central Canada, we are faced with conclusive evidence that if plants were located in the maritimes and the west they would be able to develop the same type of skill with the same speed as was shown previously.
The minister has referred to the efforts that are being made to obtain general co-operation from those who will be responsible for our production. He has indicated, and I have expressed my own hope that all members will agree, that there will be no doubt about the wholehearted co-operation of all Canadians in any steps that are made necessary by the emergency which we face. There can be no doubt that Canadians will accept any challenge that may arise, so long as that challenge is presented to them in clear and understandable terms which will indicate the necessity for whatever they are called upon to do.
I intend later to join in some of the questions which will be asked about the different aspects of defence production, but I wish now to deal with a subject which I believe is of major and compelling importance; and it relates to the announcement just made by the Minister of Defence Production. The minister has spoken of our skill, existing and potential. He has spoken of our tremendous industrial capacity, existing and potential. Our skill and the skill of other industrial nations throughout the free world is going to depend, not only upon our ability to produce and the plans that are made for production, but also very largely upon how far we achieve real co-operation between those nations in the types of production which they carry out.
Shortly after the end of world war II many of us had high hopes that the lessons of that war in regard to the importance of the standardization of equipment, particularly of the calibre of weapons, would be accepted, and that we would not again have the confusion and waste, or even worse, which can result, and in many cases which did result, from non-standardization among armed forces which were working in closest co-operation with each other. Many statements were made which caused the people of the free world to believe that decisions had been made to go ahead with effective standardization. Sometimes the importance of the standardization of the calibre of weapons, even more than of the types of weapons, is
Supply-Defence Production hardly recognized in the general discussion of this subject of international co-operation.
Important as it is from this point of view that standardized weapons be used by armed forces which are called upon to work together in the very closest co-operation, there are other considerations which are even more important. In the first place, if we have different types of weapons and different calibres of weapons employing different types of ammunition, obviously the men who will be called upon to stand side by side in the defence of freedom will require different books of instructions to tell them how to carry out the duties they are to perform in such close physical association. But there is something infinitely more important than that. If we have different types of weapons that in itself creates supply problems, creates difficulties in instruction, and in the end possibly difficulties in drill itself. If we have similar calibres of rifles, machine guns, mortars, rocket launching weapons, guns for aircraft, guns for ships, artillery pieces, and so on, we shall be able to have standardized production of ammunition.
This is tremendously important, because in the end it is the ammunition that does the job. The weapon is merely a device by which the ammunition is projected to the points to which the whole military plan calls for its application. Each weapon, whether it be rifle, machine gun, mortar, rocket launcher or artillery piece, is like a huge tap through which, once it is put into active operation, a flow of ammunition continues to flow in enormous quantities. The moment we accept the proposition that we are not going to have similar types of weapons, we accept also the fact that we must have different types of ammunition, with resulting supply problems in handling the ammunition requirements of the forces that are working together in a common cause.
I raise this question today because of a discussion which took place yesterday in the House of Commons in Great Britain. It was indicated definitely by the British Minister of Defence that their government has made a decision to proceed with the manufacture of rifles and small arms of a different calibre from that which the United States is to produce. The Minister of Defence Production has indicated this morning that it is the intention of the Canadian government to proceed with the production of small arms and other weapons of the same calibre, and I assume of the same type in most cases, as are being used by the United States armed forces.
I am not questioning the necessity for such a decision. The main thing is there must

Supply-Defence Production be a decision to produce equipment which can be used most effectively by the forces engaged in a common defence effort which we all still earnestly hope will preserve peace where it exists and restore it in those areas where there is now real war. The hope of peace-and our thoughts should be concentrated on that reason for what we are	doing-largely depends upon the
effectiveness and efficiency of the efforts that are made, not by Canada alone, not by the United States alone, not by Great Britain alone, not by France alone or by any other country acting alone, but by all the free nations working together to put the skill and the vitality of the energy of their people to work in one common cause in such a way as to produce the best results. The thing which will be most likely to deter the men of the Kremlin from any aggressive act which would precipitate another holocaust on the scale of a world war is the knowledge that all the immense skill and productive capacity which they envy, and which they fear as much as and perhaps more than the atom bomb, is being put to work to achieve the greatest possible result. Failure to standardize weapons will in itself be something very encouraging to the men of the Kremlin.
It is not our right, and it is certainly not our duty, to criticize the action of any other government with respect to the domestic affairs of the country in which that government has its responsibility. But when it has to do with matters in which we have a common interest, then I submit we not only have the right but the duty to say what we think should be done to achieve the best results in the common cause in which we are engaged. I do not think it is necessary at this stage for us to determine who is or is not to blame. What we are confronted with is the real and alarming fact that a dangerous, frustrating and possibly disastrous decision appears to have been made. It is not only the right but the duty of hon. members of -this house, as well as members of the British House of Commons or of the congress of the United States, to indicate in the clearest possible terms what they think will best contribute to the combined strength of those nations which are associated in one of the greatest causes in which they have ever been jointly engaged.
It is not too late for those decisions to be changed. It is not yet too late for the governments of the United States, the United Kingdom, and all the Atlantic powers, as well as -the powers generally associated in the United Nations, -to meet and discuss this vitally important subject, because production
TMr. Drew.]

is not yet far advanced in these new types of weapons. According to a Reuters dispatch appearing in the press of Canada today, in answer to a definite question the Minister of Defence, Mr. Shinwell, definitely stated in the British House of Commons that the British government has made up its mind to produce small arms-rifles and machine guns -of -280 calibre as soon as possible. In response to further questions which were asked on that point, Mr. Shinwell expressed -the opinion that there perhaps need be no great cause for concern as to the effect of such a decision on the close co-operation of the defence forces of the commonwealth in the years ahead.
As a Canadian and a member of the Canadian House of Commons, and expressing my opinion as a Canadian with an interest in the joint effectiveness of all our plans for defence, I submit that this is a misconception of what the consequences will be of such a decision. I am not suggesting that the fault lies with the government of the United Kingdom alone. It may well be that the fault lies equally with the government of the United States for failure to standardize. That is not for us to say; but I suggest it is for us to say that, no matter who is to blame for the failure to standardize so far, we in this house want to see that measure of standardization which will produce the maximum effectiveness of the armed forces we are called upon to raise.
I do not think that the Canadian government is called upon to accept silently any decision of that kind. As an increasingly important member of the Atlantic community and the whole community of free nations, Canada is perhaps in a better position than any other nation today to say to the two leading nations of the west that we want to see standardization come before it is too late, and to urge that we have further meetings and try to avoid the conceivably disastrous consequences that might result from a decision of this kind. The failure to standardize small arms, artillery pieces, rocket launchers, mortars and other projecting equipment of all kinds might mean the difference between victory and defeat if unhappily we are ever called upon to resort to force of arms to defend our freedom.
I have raised this question today, Mr. Chairman, because a very real danger now confronts us. The United States has announced its decision to produce -300 calibre rifles and machine guns. The government of the United Kingdom has announced its decision to produce rifles and machine guns of -280 calibre. The government of France has announced its decision to manufacture rifles and machine

guns of 7-5 millimetre calibre. Other nations are making similar decisions, wholly inconsistent with that measure of co-operation which is essential if the western powers are to attain the combined strength which will preserve peace simply by the fact of its existence. In our early childhood we all learned the story of what happened in the building of the tower of Babel. This is not the building of a tower; it is the building of a great bulwark to preserve our civilization and that of the whole world, and this decision might have terrible consequences. In any event the consequences could be very serious in the confusion and inefficiency in the production of munitions.
I think it is appropriate for us to say to our own people, and also to point out to the nations associated with us in the Atlantic community, that we on this side of the Atlantic have one great advantage that geography has given us. We have the defence barrier of the Atlantic ocean. We have the defence barrier of the Pacific ocean. Yes, though distances may be diminished month by month through the increased range of aircraft, we still have the powerful barrier of the Arctic wastes between us and the only enemy in the world that threatens us or any of the free nations today. If we should come to the terrible necessity of employing these forces for the defence of freedom, we know that this North American continent is of vital importance, not only to ourselves as a source of production, but also to the other nations associated with us in this common cause. We have the skill that has been developed here; and when I make that statement I would not want anyone to think I was forgetting the vast accumulated skill of the nations of Europe and Asia associated with us in this effort. But the very fact that there are oceans and Arctic wastes protecting us gives us an advantage which should not be ignored by any of the nations which are closer to the immediate actual threat of armed force.
Everyone knows what happened in the last world war. God forbid that events of that kind should be repeated. We are building our defences in the hope they will not be repeated; but in building those defences we must recognize the eventual possibility that these arms, and the men who carry and handle them, may have to be employed in military action. With the tremendous and truly appalling increase in the destructive power of weapons of all kinds, it is not beyond the realm of possibility that there might be serious dislocation of production throughout the nations of Europe and also
Supply-Defence Production in the British isles, even though the armed forces opposed to us were not able to move forward one inch.
With that thought in mind it seems to me that without being called upon simply to accept without question the decisions of other nations, the government of the United Kingdom and the governments of the countries of Europe might, with great advantage to themselves and to us, examine the importance of having weapons of all types of the same calibre as those which will be produced on this continent. The time might come when they would have to look very largely to this continent for continued supplies of ammunition for the weapons they have produced; and I think we have a right to say that in this common cause, no matter what may be the underlying reasons for these varying decisions, every conceivable effort should be made to have weapons of the same calibre, and if possible of the same type, as those that will be produced and handled in North America.
What I have said is related mainly to small arms, but I have indicated that my remarks apply with equal force to all weapons designed to project ammunition toward an enemy, whether they be in the form of artillery, mortars, 'rockets, bombs from aircraft, or the new types of self-propelled weapons. The minister has announced this morning that we have adopted the 60 millimetre and 81 millimetre mortars to replace the 2-inch and 3-inch mortars we have used in the past. We are also to adopt the 3 - 5 inch rocket launcher. We are to produce 105 millimetre and 155 millimetre howitzers to replace the 25-pounder and 5-5 inch howitzer which have been standard up to the present. We are also adopting the 3-inch 50 calibre naval gun, which is a United States standard weapon. This indicates the extent to which we are adopting their standards. I am not now going to indicate all the consequences which might flow from that decision. I would point out, however, that this means a great departure; that it means the adoption of new books of instruction; that it means the adoption for the first time of equipment different from that which is being used by other nations of the commonwealth. Once you adopt new weapons and new books of instruction, it is not long before you adopt new types of drill, and there are other important consequences which may flow from that decision.
For these reasons I most earnestly hope that the views I express this morning will receive the approval of the government; and after all, we have had in recent days some satisfying evidence of agreement on other
4082	HOUSE OF
Supply-Defence Production subjects, though not as important as this. I would hope that no one in the United Kingdom or elsewhere would take it amiss if we Canadians, associated with them so closely by ties of blood, of sentiment and history, say in complete frankness that without regard to the reasons for these decisions, and without regard necessarily to what may be the ultimate decision, every effort should be made to standardize all types of weapons, at any rate as far as calibre is concerned, so that the armed forces of the free world may attain the very highest measure of combined power.


Mr. Croll:: Does the hon. gentleman appreciate the fact that we had to make a decision?


George Alexander Drew: In the earlier part of my remarks I said it was necessary for us to make a decision. The reason I am making these remarks is that it is still not too late to get uniformity. Only yesterday it was indicated in the British House of Commons that, while a decision has been made, they are only now starting with the production of new types of weapons. We know we have not yet started on the production of these new weapons; therefore it is still possible, if the nations will get together, to achieve that measure of standardization which I am sure the hon. member who has just spoken, and who had very real service in the last war which gives him expert knowledge of this subject, will regard as important.


David Arnold Croll: Will the hon. member enlighten the house as to the reasons and motives that led Britain to go one way, and the United States to go the other way, with respect to munitions and weapons? I was following him closely, but there would seem to be some reasons which do not appear on the surface.


George Alexander Drew: That is one place in which the Minister of Defence Production is in the best position to enlighten us. I said that no matter what the motives might have been, no matter what the reasons might have been, in regard to a decision of such vital importance, I believe Canada should, if necessary, take the lead in asking that all nations reconsider their decisions. This should be done without delay, so that the tooling up shall not proceed to such an extent that we will perpetuate confusion and inefficiency in an effort of this kind.
It is not for us to impute motives or to try to interpret the motives of other governments. It may well be that the Minister of Defence Production is in a position to say what reasons the governments of the United Kingdom and the United States have given for not coming to an agreement. I recognize


that the Canadian government cannot, by its own unilateral action, assure standardization between those nations, which are the two leading nations of the free world. What I am saying is that leadership can be given by the Canadian government by expressing, in the most unqualified terms, the concern of Canadians generally, as well as of the Canadian government, about this lack of standardization, and by inviting the other nations to meet, particularly the United States and Great Britain, to seek a basis of understanding on this vitally important question.
I would remind hon. members that we were given great hopes, in speeches made both in this house and elsewhere during the past few years, that there was to be effective standardization. The member for Spadina has asked a question in regard to motives. I am not going to seek to interpret or explain the motives of another government. It was my intention, however, to refer to an aspect of this problem which I regard as far from reassuring.


David Arnold Croll: Perhaps I should have used only the word "reasons". I was not looking for motives.


George Alexander Drew: I was not taking exception to the word. I take it we are all hopeful that whatever the reasons were, those which others will put forward may still have some results. After all, that is the vital power of democracy. One of the things that was learned during the last war was that the greatest weakness of Germany, and our most powerful weapon, was that no one in Germany could criticize a decision which produced unsatisfactory results. Perhaps our strongest weapon, perhaps stronger even than the atom bomb, is our right to speak as free men and women, before it is too late; to say that certain things should be done, if in fact those things should be done.
Before leaving this subject I wish to refer to a related matter, because it is one with which some of the younger members may not be as familiar as some others who have had occasion to recall things that have happened in the past. I hope that the fact that there are private profit interests involved in the production of some weapons has had no part in any decision which has been made. When I make that statement may I, in view of the tendency that there is to oversimplify statements of the kind, say that this is no new thought of mine, as many hon. members know. My firm belief that weapons should be made only in government plants, or in plants supervised or operated by the government, is one which relates not only to

efficiency of "government production, but also to the dangerous consequences that may follow where private interests are involved in the production of materials which have no normal market of any kind, which can only be sold to governments and should be produced only on the basis of a careful decision of the government itself as to what the requirements are.
I believe it was a great step forward when Canada made the decision to produce small arms and other weapons in government arsenals. That decision was made in the early stages of the last world war. The principle, however, had been accepted many years before. There was established near Toronto the Canadian Arsenals Limited, small arms division. There was established at Longueuil many years ago the Canadian Arsenals Limited, gun division. The small arms arsenal at Long Branch was designed primarily to produce rifles and Sten guns, and is of course capable of producing machine guns and other weapons of that kind. The gun arsenal at Longueuil was designed both as a pilot and a research plant, as well as a producing plant, to make artillery pieces.
Mr. Chairman, I can conclude in a few minutes, but if you now wish to call it one o'clock, I shall conclude within a few minutes after we reconvene.
At one o'clock the committee took recess.
The committee resumed at three o'clock.
By leave:



ANNOUNCEMENT OF CARRYING CHARGE UNDER INTERNATIONAL AGREEMENT

Clarence Decatur Howe: Mr. Chairman, I should like to ask the unanimous consent of the committee to make a statement about an international agreement. The statement is timed for this hour, and I hope the committee will give me permission to put it on Hansard.


Some hon. Members:: Agreed.


Clarence Decatur Howe: I would like to make an announcement to the house in regard to wheat. Article VI of the international wheat agreement provides that the basic minimum and maximum prices under the agreement are exclusive of "such carrying charges and marketing costs as may be agreed between the buyer and seller."
The Canadian wheat board is of the opinion, and the government concurs in the view, that under conditions now prevailing
Wheat
a carrying charge should be added to its selling price of wheat under the international wheat agreement, effective on sales which will be registered with the international wheat council for the crop year 1951-52. The international wheat council is meeting in London, England, this week, and the Canadian representatives have conveyed the board's decision to importing countries represented at the meeting. The carrying charge which will be added to the board's international wheat agreement selling price is six cents per bushel, and will apply on agreement sales for registration in 1951-52. The board will today commence 1951-52 sales under the agreement.
I might add that, owing to commitments already made, the carrying charge on international wheat agreement wheat will not apply on the balance of deliveries or sales of wheat which have been or will be registered against 1950-51 agreement quantities.
It is my information that the other principal exporting countries participating in the international wheat agreement, namely, the United States and Australia, will initiate a similar policy in regard to carrying charges on wheat sold for 1951-52 under the international wheat agreement.
Since the board's selling price for domestic consumption in Canada is the same as the price at which it sells wheat under the international wheat agreement, the six cents per bushel carrying charge will apply on domestic sales. Effective immediately, the board will add a carrying charge of six cents per bushel to its domestic selling price.


The Chairman:: We will now revert to the item under consideration at one o'clock.

The house in committee of supply, Mr. Dion in the chair.



DEPARTMENT OF DEFENCE PRODUCTION

[Stage Direction]
76. Departmental administration and payments to Canadian Commercial Corporation and other corporate agencies for services provided in connection with defence purchasing and production, $5,000,000.
George Alexander Drew: When the committee rose this morning I was discussing the two government arsenals, one near Toronto and the other at Longueuil. Having regard to the fact that Canada and the other industrial nations associated in the Atlantic pact are preparing to build defence forces which may require many changes of weapons over the long period during which this emergency is likely to continue, it is of the utmost
4084	HOUSE OF
Supply-Defence Production importance that the small arms arsenal near Toronto and the gun arsenal at Longueuil should be operated by the government.
I regret that the government has announced that it intends to place the gun plant at Longueuil under the control of a private manufacturer and is permitting its use for the fulfilment of a private contract. That is clearly inconsistent with the policy established by this government, a policy which was first declared as the Canadian policy in regard to the production of weapons by the Conservative government led by R. B. Bennett. That policy has therefore been generally accepted on both sides of the house for many years. I hope the government will reconsider its position and decide that the guns to be made at Longueuil-and I am not suggesting that they should not be made there- will be made under government direction and control. I hope that the government will declare that it intends to continue the policy that weapons, as distinguished from general defence requirements, which in most cases are the by-product of normal civilian production, will be made in government arsenals, or in plants operated directly under government control.
I do not intend to enlarge upon the demonstrated danger of the activities of those who try to stimulate sales, or try to change the decision of governments as to the types of weapons they will use. The evidence in regard to that is all too clear over the years that have passed. I am satisfied that it was in recognition of the evidence to that effect that two succeeding Canadian governments of different political persuasion stated their belief that weapons which only have a military use, and have no normal market, should be made either in government arsenals or in plants operated fully and directly under government control. I leave that subject hoping that we shall receive reassurance on that score.
The people of this country are to be called upon to spend very large sums for their part in the defence of freedom. I am sure that they will willingly accept any burden imposed upon them which they believe to be a necessary part of our participation in that extremely important undertaking. I do think, however, that there is a sentiment, held very largely throughout Canada, that at a time when sacrifice for the defence of freedom is demanded not only of those who will contribute financially in the form of taxes or otherwise, but also of those who give personal service in the armed forces, that sacrifice should not be balanced in any way by profiteering on the part of those who are in a position to gain advantage because of the


necessity for the sudden expansion of our producing capacity for the needs of this time. That is particularly true of equipment which is strictly of a military character, such as rifles, machine guns, artillery pieces, naval guns, rocket projectors, mortars and everything of the kind. I am sure it would give the people of this country a great measure of confidence in our own participation if that policy were strictly adhered to. I think also it would be an indication on our part that while we do not presume to interfere in the decisions of any government in regard to its domestic responsibilities, this country is very definitely against profiteering in the provision of the weapons of defence or war.
To refer back to what I said earlier about standardization: Whatever the reasons may be for failure to agree upon standardization, I do in all earnestness urge upon the Canadian government the immense importance of doing everything within its power to bring about the reconsideration of those decisions which could very well have disastrous consequences for us and for all the nations of the Atlantic community. It is not yet too late to step back from unwise decisions to make weapons of different calibres and different types in those countries which are seeking to combine their forces in Europe under General Eisenhower and elsewhere under combined commands.
I believe that Canada, making it clear that we follow policies in which no self-interest could be shaping our course, policies which have been clearly declared in the past, would be able to invite the nations to reconsider this matter, and perhaps in a way that no other nation could at the present time. If this emergency is as real and as great as it has been pictured to us, then no stone should be left unturned to give to the nations of the free world the greatest strength they can possibly have. Canada at this time can give leadership that may have tremendously important consequences for us and for all mankind in the years ahead.


Mr. Thatcher:: Mr. Chairman, I welcome this opportunity to take part in the debate on the estimates of the Minister of Defence Production. I think most people in Canada will be pleased to have received the minister's statement. Some of us are at times not very happy with the methods the minister uses, but I think all Canadians will agree that he does seem able to get things done.
I must say, however, that in these two and a half months as head of the Department of Defence Production, the minister has not shown up quite as well as he usually does. He has not displayed his usual business acumen or his customary ability to get men

working for him. It seems to me that the chief task of the Department of Defence Production is to rearm Canada, to provide our three services with arms, equipment, and weapons, so that they may defend our country in the event of armed aggression.
From the figures the minister gave this morning, it is obvious that some progress has been made in that direction. I say however that infinitely more could be accomplished, if the minister would agree to change certain major, basic policies in his department. I believe it can be said that today in Canada only two of our provinces are producing for our defence effort at anywhere near full capacity. It seems to me that the minister today could be likened to a farmer who has on a wagon a heavy load to be moved. He owns eight or ten horses with which to move that load, and the harness required to harness the whole number. I believe most of us would consider that farmer very silly if, with his eight or ten horses, complete with harness, he decided he would use only two to pull the load. Most of us would think that farmer crazy if he made only two horses do the work-and then in addition held the reins so tightly that their progress was impeded.
Yet that is precisely what the minister is doing in his department today. He is acting like that farmer, because he is preventing seven or eight of our provinces from playing their full part in the defence effort. He is making use of only two, perhaps three, of the provinces.


William Moore Benidickson: Half a horse?


Wilbert Ross Thatcher: I say that even with the use of our total capacity, the use of all the factories and resources we have, we shall be most fortunate if we are able to rearm in time, and to prepare ourselves for possible aggression. But surely if we use only part of our capacity our chances of being prepared will be considerably less than they otherwise would be.
I say the people of Saskatchewan, Alberta, Manitoba, Newfoundland, Prince Edward Island, New Brunswick, Nova Scotia and British Columbia are just as patriotic as those in central Canada, and just as anxious to play their part in this defence effort. They are anxious to do something to help Canada rearm, and to prepare against aggression. All they ask is that the minister give them a chance to use their plant capacity more adequately.
Perhaps the minister is not a farmer, and the analogy to which I referred may have little meaning for him. So that he may understand my point, let me express it by a mechanical comparison.
Supply-Defence Production


Clarence Decatur Howe: About the half horse, do you mean?


Wilbert Ross Thatcher: I would compare his new department to a new car. The driver is at the bottom of a steep hill. Would the minister not agree that the driver was not too bright if he got out of the car and disconnected six of the eight cylinders before attempting to climb the hill? But he is doing precisely that in rearming Canada today. He is only using two out of a possible ten cylinders. He is using fully the plant capacity of only two of our ten provinces.
What I shall say this afternoon applies to six and possibly eight of the provinces of Canada. I shall deal with only one aspect of the minister's speech, and that is his program for the diversification of industry. Since the beginning of this session I have often and consistently maintained that the minister has not been giving the outlying provinces their fair share of defence production contracts. I have suggested particularly that Saskatchewan is not getting its share. On numerous occasions the minister has promised to bring to the house figures to show that these outlying provinces are getting their share. I was disappointed this morning therefore when I heard the minister speak for the most part in platitudes; he did not give us any basic figures to refute the charges made earlier in the session. I think he told us this morning that the prairies' share was "quite reasonable" and he said that "Saskatchewan had not been overlooked". I shall maintain, and I think I shall prove this afternoon, by using figures which the minister's department has supplied to me, that these provinces are not receiving their fair share of defence contracts, that they are not receiving their fair share of defence industries. I say that the minister's attitude toward my province is arbitrary, unfair and unwarranted. If he continues to allocate defence contracts in the way he has done in the past, he is going to weaken the defence effort of this nation and he is going to sap away the strength and population of important segments of this country.
Some two or three days ago in the public accounts committee Mr. Low, who was previously the head of the Canadian Commercial Corporation, presented us with a break-down of the contract figures for the past fiscal year.


Joseph-Alfred Dion: That committee has not reported and the hon. member should not refer to its proceedings.


Wilbert Ross Thatcher: I simply wanted to put the figures on the record.

Supply-Defence Production


Mr. Wrighi:: These figures are a matter of record in the public accounts which have been tabled in this house.


Wilbert Ross Thatcher: I think I am in order in quoting these figures. As I say, they are for the past fiscal year. I shall give the figures in thousands only.


Joseph-Alfred Dion: In that case the hon. member would be in order.


Clarence Decatur Howe: To what year is my hon.
friend referring?


Wilbert Ross Thatcher: It would be 1949-50.


Clarence Decatur Howe: We are told that these figures were quoted in the public accounts. Can the hon. member give me the page in the public accounts?


Wilbert Ross Thatcher: I am sorry I cannot do that because they were only presented at the last meeting and the minutes have not been printed. They are Mr. Low's figures and I am sure the parliamentary assistant has them.


Clarence Decatur Howe: The chairman has ruled out of order reference to figures given in the public accounts committee, which committee has not reported to the house as yet. The hon. member for Melfort stated that the figures were contained in the public accounts; which is correct?


Wilbert Ross Thatcher: I do not blame the minister for being ashamed of them, but these are the defence contracts by provinces, which were allocated during 1949-50 in round figures:
Newfoundland	 $	471,000
Prince Edward Island	 1,491,000
Nova Scotia	 7,334,000
New Brunswick	 2,097,000
Quebec	 81,055,000
Ontario	 89,401,000
Manitoba	 9,600,000
Alberta	 9,576,000
British Columbia	 8,356,000
Yukon	 3,409,000
Saskatchewan	 769,000
United States	 3,672,000
Britain	 5,261,000
What does that mean? It means that in the year under discussion Saskatchewan got only a little more than three-tenths of one per cent of all the contracts which had been let by the Canadian Commercial Corporation. As if to add insult to injury we find that Yukon got five times as much as the whole province of Saskatchewan. Would any hon. member, regardless of his politics, suggest that that is a fair allocation of contracts? The minister may say that Saskatchewan "has not been overlooked", but certainly in that year Saskatchewan did not get its fair share. Let me proceed. When this session opened I put a question on the order paper and I should like to place again on Hansard 
the questions I asked and the answers that were given, and I quote from page 451 of Hansard of February 19, 1941. I asked how many of the 80,000 contracts awarded in the first nine months of the current fiscal year with Canadian industry were placed in the various provinces, and their dollar value, and this is the answer that I received:
Yukon	 $	254,000
British Columbia	 33,574,000
Alberta	 6,707,000
Saskatchewan	 450,000
Manitoba	 6,667,000
Ontario	 214,436,000
Quebec	 154,055,000
New Brunswick	 5,468,000
Nova Scotia	 23,003,000
Prince Edward Island	 329,000
Newfoundland	 402,000
In those nine months my province received one-itenith of one per cent of the defence contracts. The minister got up in the house and said that these figures represented only post office locations, and thus did not give the true picture, that they signified little. Perhaps they did not signify much to him, but I can tell him that they certainly signified a good deal to the people of my province. They signified rank discrimination against Saskatchewan.
A month or so later I placed another question on the order paper in order to try to have these figures brought up to date, but I was refused a break-down. The parliamentary assistant told me that the request was not a fair way to break down the figures, and therefore he did not think it would be in the public interest to bring in the return. It may not have been in the interest of his department, but I think the people of my province and of other parts of Canada were very interested in such a break-down. As far as I can see, the only reason they were not presented in that way was that the parliamentary assistant and the minister were a little ashamed of them.
Now we come up to the time when the Department of Defence Production was set up some two and a half months ago. I asked the Minister of Trade and Commerce another question on February 20, as reported on page 496 of Hansard:
Can the Minister of Trade and Commerce give any assurance that in future the prairies and the maritime provinces, and I refer particularly to Saskatchewan, will be given greater consideration in the allocation of defence contracts?
If I may presume to say so, the minister very facetiously answered me in this way:
That is rather like asking a man if he will stop beating his wife. We endeavour to distribute defence purchasing as equitably as possible as among all sources of defence materials. That has been and will continue to be our policy.

I ask the minister if I am to take from that statement that Saskatchewan will continue to receive only one-tenth of one per cent of defence contracts in the future? When the Department of Defence Production came into being, the parliamentary assistant was kind enough to supply me with details of the various defence contracts placed as they were released every two weeks. Those of you who have gone through these will know that there is no provincial break-down and that the totals are not included. I wonder if that is done for obvious reasons? The first departmental release was for the period April 1 to April 15, and the only contract awarded in Saskatchewan was for fuel oil at Prince Albert in the amount of $27,500. The next one was for the period of April 16 to April 30. Not five cents out of a total of millions of dollars was awarded to my province. The next release was for the period May 1 to May 15. Again there is not one five cent piece for the province of Saskatchewan. A release termed "No. 3" for the same period also showed not one five cent piece for Saskatchewan.
Then we come to the latest figures which I was able to obtain only yesterday, "release No. 4", which shows a contract to W. C. Wells Construction Company, Saskatoon, Saskatchewan, for the building of an airport in Alberta. We are grateful to have that contract, but it will be admitted I think that the men who will be employed will come mostly from Alberta. That contract is not going to mean an awful lot to the economy of my province.


Solon Earl Low: We should have had it ourselves.


Wilbert Ross Thatcher: Let me sum the matter
up. Despite the figures which the minister gave this morning, only two contracts out of 415 have been placed in the province of Saskatchewan since his department commenced operations. Possibly there are later figures, but according to those which I obtained yesterday, at this date only two contracts out of 415 have been placed in Saskatchewan. If that is treating the province of Saskatchewan in "a reasonable way", as the minister suggests he has been doing, then I think the minister had better check his dictionary.
There is one other aspect I feel I should mention at this time. People in all walks of life are concerned about this matter in my province. Resolutions are being passed by trade unions, boards of trade and city councils. I hope my good friends from Saskatchewan who are in the Liberal party will also take exception to this discrimination.
Supply-Dejence Production


Mr. Ferrie:: They built an airport at
Moose Jaw, and they are sure taking exception to that.


Mr. Argue:: Are you opposed to that?


Wilbert Ross Thatcher: I suppose it is fortunate
that some members object once in a while. There is an old saying that the squeaky wheel usually gets the grease. I remind the committee again that in every case these figures I have used today have been supplied by officials of the minister's department. Possibly some hon. members will say, as the minister has said, that Saskatchewan has no industrial capacity, or that the other prairie provinces and the maritimes lack such capacity. I have looked through some of these contracts, and I note that many of them are for food, meat and dairy products. There are contracts let to Canada Packers in Toronto, Canada Packers in Montreal, and Bordens in Toronto. Surely these are products that we could produce economically in Saskatchewan. We have clothing industries out there. We have lumber and saw mills. We can produce boxes. We have an oil industry. We can produce petroleum products both at the initial and refined stages. We have a brick plant. Surely if the minister and his department are genuinely interested in this problem there are many things they could do to diversify industry. Certainly the department is not using the industrial capacity we have there now.
Are there any particular reasons why parliament should be interested in the giving of more defence contracts to outlying parts of the country? I humbly suggest there are numerous reasons why every member of the House of Commons, regardless of his politics, should try to see that the outlying provinces receive fair treatment in this regard. In the first place there is a great need for the dispersal of industry for reasons of defence. For the most part our present industrial capacity is concentrated in the two central provinces. If there should be war, and the enemy had any kind of an air force at all, with four or five well placed bombs on the hydro plants of eastern Canada our whole industrial capacity could be wiped out overnight. If we can believe our United States friends to the south, about thirty per cent of any attacking group of bombers is all that can be stopped in a concentrated air attack. That means the other seventy per cent can get through. Therefore I think Canada's industrial capacity is very vulnerable to air attack at the present time. Surely it would be senseless to add to that concentration and make it worse.
4088	HOUSE OF
Supply-Defence Production
I suggest to the minister that the nation as a whole would benefit if he would put some of these industries in other parts of the country or help to build up the ones presently existing by giving them defence orders. I think the discovery of oil and gas in western Canada has been a great development, and will help our future industrialization. There is a good deal of scrap iron on the prairies on farms and elsewhere. In the last war most of our scrap iron was sent to mills in central Canada. Since that time, however, the freight rate has risen by 45 per cent, and from every indication it is probably going to go up a little more. Why should it not be sensible for the minister to give some metal orders to our plants in Regina, Moose Jaw, Saskatoon, Calgary or Winnipeg? We have foundries which I am sure could produce some kind of equipment if they were given the opportunity.
If the minister does not choose to do something for my province by way of defence industries, I am sure that we are going to see its population go down as it did during the last war. We are going to see many of our skilled young people drained out of the province to central Canada or to British Columbia, and I do not think that is in the national interest. I want to say once again that the minister's own figures make it clear beyond any shadow of doubt that up to this point Saskatchewan in particular, and the other prairie and maritime provinces, have been discriminated against in the awarding of contracts. The minister and his department have told me at various times that they always let defence contracts on a competitive basis. In many cases that is probably a wise thing to do, but with the freight rates as they are it means that very seldom can an industry in the west, or at the extreme end of the maritimes, compete successfully with central Canada if the goods are sold f.o.b. some Ontario point. I ask the minister why it would not be proper, reasonable and fair, to take tenders for these various contracts f.o.b. factory. In other words, if there is a factory in Regina competing with a factory in Toronto, make these contracts or tenders f.o.b. factory. That seems feasible to me. In that way we could avoid the discrimination which exists because of freight rates.
Even Saskatchewan newspapers, my good friends the Sifton press, are somewhat worried about this situation. The Regina Leader-Post of February 20, 1951, carried an article reading in part:
Every possible support should be given to the . . . attempt to obtain more contracts and subcontracts to enable Saskatchewan plants to remain in operation. This time the arguments in favour of such a


policy are unanswerable, and Ottawa will be shortsighted in the extreme if it blindly ignores them as it has in the past.
That is the Regina Leader-Post which is certainly not noted for its C.C.F. sympathies. I call upon the minister today to reconsider this question, and in the future to give greater consideration to these provinces in the awarding of defence contracts. If he does not do that, then perhaps I am biased; but I can only draw one conclusion therefrom, namely-that my province is getting no contracts because of its government's political colour.


Clarence Decatur Howe: I think perhaps I should answer immediately a statement that is so completely distorted as that made by my hon. friend.


Wilbert Ross Thatcher: Your figures.


Clarence Decatur Howe: I suggest the biggest industry in Saskatchewan is operated by the government as a defence industry, and that is the central ordnance depot in the city of Regina. Surely that must be contributing something to the economy of Saskatchewan because it is costing the federal government a few million dollars to keep it in operation. I point out to him that one of the most important defence efforts is the air training plan, and I point out that three of the largest schools under that plan are located in the province of Saskatchewan, and each school will be maintaining several hundred men in that province. The moneys involved in maintaining these men will be paid largely to Saskatchewan firms. It seems to me that will make a contribution of the type that Saskatchewan can take care of.
I might point out that some $4 million of contracts for airport construction has been placed there within the last month. My hon. friend is not willing to accept my statement that the addresses shown on tenders are not a complete disclosure of where the work is being performed. Yet he himself cites one against me when he says that a Saskatchewan contracting firm mailed a tender from Saskatoon, but the work was performed in Alberta. He does not admit for a moment that could happen in reverse, and is happening.
The hon. member expects us to place contracts with Saskatchewan firms. What industrial plant is there in Saskatchewan that is not working to capacity? We have placed orders for blankets there, as we have placed orders wherever we could find capacity. We have placed orders for boots there wherever we could find capacity. If there were capacity, Saskatchewan firms would be tendering on the contracts that go out from the department every day. The hon. member suggests as a remedy that the government purchase f.o.b.

factory and pay the freight. Let me tell him that if we purchased on that basis no Saskatchewan firm would ever get a contract; it would be just impossible. If we could buy in Toronto and deliver in Saskatchewan free of freight, those goods would be delivered at prices which would probably undersell any Saskatchewan firm. Firms in Saskatchewan have the protection of the freight charges from larger centres on goods consumed in the area. With three training schools, the ordnance depot and all the other war paraphernalia already in Saskatchewan or due to be there shortly the. freight added to the tender price to points of delivery is a very important protection at the place of delivery. If we followed the hon. member's advice, that protection would be thrown out the window. That shows how utterly silly his advice to the government is in that connection.


Percy Ellis Wright: On that point can the minister name one contract he has let in Saskatchewan which would not have been let there if freight conditions had been as he describes?


Clarence Decatur Howe: Yes, I can mention one; bread for the employees at the ordnance depot in Regina, or almost any supplies we buy for the troops that are or will be stationed in that province.


Percy Ellis Wright: Bread could be bought more cheaply where?


Clarence Decatur Howe: Probably in Toronto.


Percy Ellis Wright: And shipped out to Saskatchewan?


Clarence Decatur Howe: My hon. friend wants me to throw away the freight charges or absorb them. We try to buy what we can in every province. I have made a little analysis, and I find that of all the food purchases during the past year 56 per cent came from Ontario and Quebec, 20 per cent from the prairie provinces, 14 per cent from the maritimes and 10 per cent from British Columbia. Perhaps I had better give an analysis of the various fields of purchasing, which when added up give quite a different picture than the quotations of my hon. friend, which really referred to manufactured products. He must recognize the fact that 81 per cent of all the manufacturing production of Canada is concentrated in the two provinces of Ontario and Quebec. I suppose the industry and initiative of the people of Ontario and Quebec had something to do with establishing that pattern, but I believe climate and geography also had a good deal to do with it. Nevertheless we face the fact that 81 per cent of our manufacturing is in those two provinces. I think about 3 per cent is in the 80709-260!
Supply-Defence Production province of Saskatchewan, if my memory serves me right. I speak subject to correction, but that is as I remember the situation. We buy as well as we can and distribute our purchases as well as we can; and I think my hon. friend will find that with the central ordnance depot at Regina, with three air training schools in the province and the other activities I mentioned such as uranium in northern Saskatchewan, on which we will spend over $2 million this year in direct government expenditure, a very reasonable part of the war expenditure is being made in Saskatchewan. But I know of no way to change overnight an agricultural economy to an industrial economy. I know of no way to change the Saskatchewan economy overnight into the Ontario and Quebec economy.


Wilbert Ross Thatcher: I am sure the minister wants to be fair. A moment ago he suggested that Saskatchewan was to have three of the largest airports, each of which would have several thousand men. I can tell him that at the Moose Jaw airport, far from several thousand there will be 650, according to the Department of National Defence. I hope he has not drawn all his other figures out of the air as he did that one.


Clarence Decatur Howe: All I can say is that Moose Jaw is not all of Saskatchewan.


Wilbert Ross Thatcher: What?


Mr. Gibson:: Not all of Saskatchewan.


Howard Charles Green: In the course of his statement this morning the minister dealt with the small industries division, and I would like some further information with regard to the work of that division. I understood him to say that the division had three functions. The first was to gather and distribute information concerning contracts being or to be carried out by primary manufacturers, and to distribute that information to the small plants. The second was to inform the large plants about the small plants which could take subcontracts. The third was to represent the small plants in Ottawa in order to give them whatever help was needed here at the capital.
Last week a Canadian Press dispatch was-published with regard to these small plants,, purporting to outline the plans of the department. I am quoting the dispatch as it appeared in the Vancouver Sun of June 6, 1951:
The defence production department intimated to Canada's "little" manufacturers today that there are some big defence projects in the wind, and they had better hurry if they want to get in on the show.
The projects included propulsion machinery for escort vessels, shell forgings, aircraft instruments and engines and distribution panels for ships.

Supply-Defence Production
No figures were made public, but officials said the projects, some of which would get government capital assistance to get them started, "will run into millions."
I presume that has reference to capital assistance for the large plants. Then the dispatch goes on:
Officials said that by giving the small manufacturers advance information on the kind of projects on which the department is concentrating at the moment, they would have a chance to bid for subcontracts on component parts with the big producers who would get the main contracts.
Then an example is cited:
For example, the department said it intended to award the escort vessels propulsion machinery contract to John Inglis Co. Ltd., Toronto.
The "little" contractor then could swing his attention on that company to negotiate a deal to handle a small part of the main contract.


Clarence Decatur Howe: Does it say who wrote that article?


Howard Charles Green: It is a Canadian Press dispatch.


Clarence Decatur Howe: No byline?


Howard Charles Green: No. It says that the defence production department intimated. As the minister knows, Canadian Press dispatches are very authoritative. In this case there is no byline at all; it is a dispatch sent out from Ottawa.


Clarence Decatur Howe: When it says the department intimated, that is a very vague statement. How does a department intimate? A department can put out a statement or an officer of a department can intimate, but to say the department intimates is pretty vague.


Howard Charles Green: As the minister knows we frequently get dispatches which, while they may not be direct statements, are based on comment by some official of a department. In most cases they turn out to be right from the horse's mouth.


Clarence Decatur Howe: Sometimes, but sometimes not.


Howard Charles Green: In any event, I am quoting this dispatch. It may or may not be true, but I think it brings up a question which should be dealt with on these estimates. It would appear from this dispatch, and also from the minister's statement this morning, that the large firms are to get these contracts, and in some cases are to get capital assistance. The small plants are supposed to run around and try to get subcontracts from these large firms. I would hope that there could be some plans devised to give further help to the small plants.
For example, why are they not made eligible for capital assistance in the same way as the very large plants in Canada. Then, are they to get the benefit of priorities in

the same way as the larger plants get priorities? Are they to get certificates of eligibility which will enable them to get away from the new depreciation plan under which there can be no depreciation written off for a period of four years? These questions are very important to many parts of Canada, certainly to the plants on the Pacific coast, and I presume in the maritimes.
You see, Mr. Chairman, and I am sure the minister realizes that this is a long-term problem facing the Canadian people. Last week he was quoted by Canadian Press as having said at Quebec on June 5:
This development of Canada's basic and Industrial resources, to meet the possibility-
I am now going to quote the words which I wish to stress.
-of a generation of international danger, was perhaps even more important than actual placement of defence contracts, . . .
I believe the minister quite properly stressed the fact that we may be in for a whole generation of international danger. It is a long-term pull. For that reason, it is particularly important that we get this work scattered out as much as possible, not only among the provinces but amongst the smaller communities in each province. Let us not have it all concentrated in the larger cities.
I believe that the backbone of the country is in these smaller centres, although I happen to represent a city constituency. For many years the trend has been to the city and away from the less populated districts. Here is an opportunity to reverse that trend, at least to some extent. The minister will recall that during the last war small plants in small towns were given the opportunity of manufacturing certain types of equipment that were needed under government contract. I know that in British Columbia there were quite a few towns which were able to put their smaller plants to work. This will be particularly necessary in the event of a third world war because of the bombing. The larger cities of Canada are practically certain to be bombed. Furthermore, we still have a very difficult housing situation in most cities in Canada. If the plants are to be built in the larger centres, the result will be men and women flocking in from the farms and small towns and complicating an already difficult housing situation.
Then, you find the same problem with the schools. The children of these people who move in have to be provided with schooling. It means the use of materials for building new schools and other buildings of a similar type, whereas out in the districts from which

the people came the present facilities would be sufficient. There are many other reasons why every encouragement should be given to the small plants in Canada. Now, at the beginning of this large defence program, is the appropriate time to adopt policies which will bring about the expansion of these smaller plants.
That sums up what I wanted to place before the minister. I would ask him to answer with regard to those three suggestions. In the first place, under the plans of his department is capital assistance to be available to the small plants? Second, are they to be given the benefit of the priorities? Third, can they get certificates of eligibility which will enable them to have the advantage of the depreciation write-off, which advantage will be given to at least some of the larger firms? I believe the minister stated this morning that these depreciation write-off privileges were in the process of being given to the amount of about $21 million. I wonder if he can give the information with regard to these three proposals, in so far as the small plants in Canada are concerned?


Clarence Decatur Howe: Mr. Chairman, I am fully aware of the desirability of spreading the work into the small plants, and into the small towns in this country. I believe the hon. member will recall that there were serious complaints from British Columbia at the beginning of the last war to the effect that no work was going to British Columbia. If he looks at the industries in British Columbia today, he will find that about half of the industries were built as a result of contracts issued for war production in the period 1940-45. If ever a successful job was done in my opinion it was done in building up industry in British Columbia, largely through subcontracts for war materials. We provided millions of dollars worth of machinery. Vancouver, which never thought of itself as an industrial city before the war, can today compete with any part of Canada in efficient production, largely owing to the fact that modern machinery and modern techniques were introduced there as part of the war effort.
Nevertheless, it is impossible to start a large war contract from the small town. For instance, about one-third of our defence production program is in aircraft. It is not possible to ask a small centre to design an aircraft and put it into production. It is possible, after production starts, to break down the aircraft into components that can be built in small towns. For example, there are subcontracts for aircraft parts being sent from Toronto to the maritime provinces. There are subcontracts on aircraft components going to Winnipeg. I dare say that
Supply-Defence Production subcontracts for aircraft components will be placed in Vancouver. Somebody whispers now. That is a process that takes time. The prime contractor must get his production line in operation, and he must get his design and fabricating up to the point where he can send patterns out to smaller plants and get components built.
That is also true of the next largest program, namely, radar. It takes a very highly competent engineering staff, and a very large staff, to bring a unit of radar production into being, but once the over-all design has been made and proven and the manufacture is under way that can be broken down very readily, and was broken down in the last war, and sent to a great number of smaller plants.
We have in Vancouver a firm that specialized on one particular branch of radar, and when orders are coming forward in the proper way that firm will be a prime contractor. All this cannot be done overnight, and the smaller the factory the longer it takes to get work suitable for that factory.
The purpose of the small industries branch is to build up that particular phase of the work, and, as subcontracts become available, to make sure that they go to plants that are capable of handling a contract of an appropriate size. That work is under way. I think it is better planned this time than it was in the last war. We are building on the experience of the last war, and I believe that in time any plant that is capable of taking work of that class will be able to get it.
My hon. friend must also keep in mind another factor, namely, that the plants in any area were not built for war. They were built for a particular purpose; and most of them are busy on that particular purpose. For example, I suppose if we had a type of contract suitable to the firms in Vancouver we would find great difficulty in getting capacity in Vancouver for that work, because Vancouver production facilities are very busy now looking after the business for which they were organized. That is equally true in Saskatchewan. Someone said: You could use all the garages in Saskatchewan to build war munitions. Unfortunately, for the war effort the garages were built for another purpose, and that was for servicing the mechanical equipment that is operating in the vicinity of those garages. We tried that in the last war, and we found that while garages were willing to do a bit of work for us in the wintertime, in the summertime they were busy on the task for which they were

Supply-Defence Production built and for which they operate. Theoretically there is capacity, but practically it is not available for the purpose we require.
All these factors have to be taken into account. I assure my hon. friend that we are as anxious as he is to see that work goes to every part of Canada, and we are making an effort to send it there, but there are difficulties and it is a task that takes a good deal of time.


Howard Charles Green: The minister did not deal with the important question concerning capital assistance, depreciation and priorities for the small plants.


Clarence Decatur Howe: Ordinarily we have tried to
place contracts in existing capacity. In some cases that is not possible. For example, if our gun productive capacity is being fully used, we have to build a gun plant, and for that purpose we extend either capital assistance or accelerated depreciation. We must acquire the facilities. That does not come into the picture so much in dealing with subcontracts. Subcontracts are usually put where capacity exists. But if we require capacity at a place and we find there the skill to carry out the work and the manpower to carry it out we will certainly extend either accelerated depreciation or capital assistance just as readily in the small town as we will in the big city.


Howard Charles Green: I think the minister will find that some of these small plants will be unable to do their part in filling the subcontracts unless they get help such as depreciation or priorities or possibly capital assistance. A few moments ago the minister himself said that many of them will be fully occupied with their peacetime production. I know that in Vancouver some of the firms would find it very difficult if they had to get into war work without assistance by one or the other of those methods. From what the minister said I take it there is no policy against giving such assistance even to a small plant.


Clarence Decatur Howe: That is quite correct.


Howard Charles Green: One other question: is there any plan in mind for building cargo vessels? I think the minister mentioned only war vessels this morning. I should like to know whether cargo vessels are to be built. If so, will they be modern fast cargo vessels?


Clarence Decatur Howe: The government encourages the construction of cargo vessels by various means; one of which is accelerated depreciation, as my hon. friend is aware, and the other is the use of escrow funds. The government has no program of governmentbuilding cargo vessels.


Howard Charles Green: Are there no modern fast cargo vessels being built in Canada at the present time?


Clarence Decatur Howe: Yes.


Howard Charles Green: Very few, are they not?


Clarence Decatur Howe: On the great lakes very modern vessels are being built. I have been asked to go up on Saturday just to see one set out on its maiden voyage. Unfortunately I cannot go. I would like to go. It is the biggest cargo vessel on the Canadian great lakes.


Howard Charles Green: I mean ocean-going.


Clarence Decatur Howe: Ocean-going? There have not been any undertaken recently.


Howard Charles Green: Are there no modern oceangoing cargo vessels under construction?


Clarence Decatur Howe: Four modern cargo vessels are being built in Montreal at the moment for Colombia. Others were built since the war, but none for Canada.


Wilbert Ross Thatcher: Can the minister say whether, when these tenders are being called, the lowest tender is always taken, or is there any conscious effort on the part of his department to diversify some of the contracts in the outlying provinces?


Clarence Decatur Howe: Yes, that is watched very carefully. There is a latitude, which I have mentioned in the house. We do not stress it, and we use it only if we think we should. It is used sparingly. If we can put a contract in Saskatchewan at not more than 5 per cent higher than we could place it somewhere else, in an area that is well taken care of, we would place it in Saskatchewan. The trouble with placing contracts in Saskatchewan is that there are very few productive facilities there, and we rarely get a price on government work from that province.


Mr. Knight:: Is it not a fact that if the
people were assured of contracts there would be a certain expansion of facilities? We are not at war at the moment, but during the last war these facilities were created in Canada in view of the contracts that were coming from the government. The minister is probably right when he says that most of our facilities are working at capacity. But I think I am right when I say that a great many of the owners of those facilities would [DOT]be prepared to expand if they were assured of contracts. That particular type of expansion is the thing we need in that province, because, as someone pointed out here today, our young men and our young women were induced to leave that province during the war by more profitable work in the east. We would have liked to keep our people at home. We have a problem. The greatest

problem that I see in the province is that we want to increase our facilities-I mean road building, hospital facilities, and things of that sort. If we are to do that we must be assured of a stable population. We must have the people there to pay the taxes. We do not want, every time there is war or a rumour of war, our population getting out of our province and leaving us helpless in that regard. My point is this, that we can establish permanent industries there, if we have the help. I admit we are getting some, but I would back up the statement of the hon. member for Moose Jaw, that we are not getting sufficient.


Percy Ellis Wright: 
Clarence Decatur Howe: As far as Canada is concerned there is no vested interest in any munitions of war that I know of. I doubt if the vested interest in any particular weapon has much to do with the present situation. The rifle has been the most irritating item and this is due wholly to the fact that the technical experts of the three countries concerned, the United States, Great Britain and Canada, cannot agree on what is the best weapon. Opinions differ. I think there are overriding considerations of logistics and supply lines that outweigh the question of which is the best weapon. I dare say that any rifle that any of the three countries is using is a good rifle.

It seems to me to be a pity that standardization of weapons cannot be arrived at. We are still taking a leading part in keeping the agitation alive to get the three countries to agree to a standardization of weapons. Not long ago an appeal was sent to General Eisenhower to take the situation in hand as the supreme commander and appoint a committee to arrive at a decision. In the meantime we are not making small arms simply because we do not want to make one that might not be standard by the time we have it in production. About fourteen weapons have been agreed upon for standardization by the three countries, which indicates some progress. But the progress should have been much more rapid and we intend to do anything we can do in the direction of accelerating the trend toward the use of common weapons.


Mr. Blackmore:: I wonder if the minister could give us some details of the measures which have been adopted to increase the production of steel in Canada? I feel that all through the program which he has been outlining there are three or four advantageous and desirable trends. Obviously the minister is endeavouring to make Canada much more self-sufficient and to that end we find the establishment of plants to produce machine tools and that kind of thing. That is why I wonder why with all the iron ore we have in Canada we have not yet become selfsufficient in steel.


Clarence Decatur Howe: Every steel plant in the country has a substantial expansion program under way at the moment. The Steel Company of Canada, our largest producer, is adding nearly 50 per cent to its basic steel capacity and is spending around $50 million for that purpose. Algorna Steel are putting in new finishing capacity and new primary capacity with a program running to about $35 million. Dominion Foundries at Hamilton are installing a new blast furnace which will probably be in operation before the end of the calendar year. Dominion Steel are also adding to their capacity but I cannot give the details as there has been some delay in working out the complete program.
The full program of expansion will add about one million tons of steel to the Canadian production, or about a 30 per cent increase. It will increase the diversity of the types of finished products that Canada can manufacture. The whole program is being carried out by private interests with money raised in the ways open to private interests. It is an expansion that is greatly in the national interest and the government has been encouraging it in every way possible.


John Horne Blackmore: By the time that expansion is completed will Canada be producing the steel which would normally be used in a peacetime year, or shall we still be short of meeting our national needs?


Clarence Decatur Howe: I should think that probably we shall always be importers of steel, for two reasons. First, this country is growing rapidly and a balanced situation today might be an unbalanced situation a year hence. Another difficulty is caused by the short runs of certain products, such as wide flanged I-beams and products of that kind. The volume is not sufficient to warrant the expense of setting up to produce that type of product. There will always probably be products that it would not be economical for us to organize to produce and which would have to be imported.


John Horne Blackmore: Many people are asking why so much of our Canadian ore is reported to be going into the United States to be processed there. Can the minister give a reason why that is so?


Clarence Decatur Howe: I will set my hon. friend's mind at rest on that. At the moment Canada is a net importer of ore. In other words, we bring in more ore than we export. That situation will change in a year or two, but I would not worry about it just yet. We have been heavily dependent upon the United States for iron ore since Canada installed its first steel plant, and we are still in that position. My hon. friend asks how much steel Canada would use if we had all the steel we could use. I do not know the answer to that, but this year we will produce about three and a quarter million tons of finished steel and import about a million and a quarter tons, or about four and a half million tons in all. If we had another half million tons I am sure we would use it.


Howard Charles Green: Have any steps been taken in recent months to establish a steel industry on the Pacific coast? We read about Consolidated using their iron tailings at Kimberley for that purpose and also the possibility of a plant being built on the lower mainland or on Vancouver island. Can the minister tell us whether there is actually any move on foot to establish a steel plant or plants on the coast?


Clarence Decatur Howe: My last advice from Consolidated Smelting is that the company is proceeding actively with the designing of a blast furnace to be carried on with its smelting operations. I have heard nothing directly about a steel plant on the west coast. My hon. friend will appreciate that the government does not build these things. An industry is built around a man with specialized skill
Supply-Defence Production and driving ability. Until that man comes forward to actively take charge there will never be a steel industry anywhere. They just are not built by committees of chambers of commerce or boards of trade and I wish boards of trade would appreciate that and not bother me so much with general requests that the government do it. The government does not do anything.


Mr. Hansell:: Before referring to the amount of this first vote on administration may I make a comment or two in respect to the observations made by the hon. member for Moose Jaw? He gave us a picture of the ratio of contracts between provinces. I think perhaps there is room for criticism but at the same time there is also room for commendation. A thing cannot be so lopsided thai everything is bad and nothing is good. The hon. member compared the difference between contracts awarded in Saskatchewan and those of the Yukon Territory, and I think that there is an explanation forthcoming there. If it is left as it is, it would appear to be a ratio or comparison that is far beyond reason. There must be some reason for it.
Then the hon. member referred to a small contract given to a Saskatchewan contractor for work to be done in Alberta. Before he got through he indicated that perhaps the picture might savour of political patronage. Of course the answer to the fact that a Saskatchewan contractor got a contract for work in Alberta may be obvious. It may be that they could not find a Liberal in Alberta to whom they could give the contract.


An hon. Member:: They do not grow them there.


Ernest George Hansell: I think the minister should be asked a very pertinent question. I am not necessarily coming to the defence of the socialist government of Saskatchewan in asking this question because I think I am just as anxious to defeat the socialist government of Saskatchewan as the minister may be. So far as socialism is concerned, everyone knows my position. Nevertheless I think the minister should answer this question. If Saskatchewan is not getting what would appear to be its fair share of contracts, if Saskatchewan is left so far behind, I should like to ask the minister whether that picture would be materially changed if Mr. Tucker should come into power after the next election.


Some hon. Members:: Oh, oh.


Ernest George Hansell: I hear my friends saying "oh, oh." They have need to answer that question because I am quite certain that when an election is called Saskatchewan Liberals will say: You vote Liberal and you will get more contracts. If that is so, the time for the minister to make a pronouncement is now.
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Supply-Defence Production


An hon. Member:: But not too early.


Ernest George Hansell: If he answers the question yes, that the situation will be materially changed, then he is telling the country that the whole defence production of the country is administered on the basis of patronage. If he says no, the situation will not be changed, then he will be telling the country that he is running the productive affairs of the country irrespective of politics, and they will not then be able to play politics in the election with respect to contracts. I believe that the minister should answer that question, and answer it yes or no.


Gladstone Mansfield Ferrie: What about Ontario? They are getting all the money.


Mr. Gardiner:: Why are you saying "if Mr. Tucker"?


Ernest George Hansell: Evidently there are some other members who would like to get the floor. They can have it when I sit down. I am not from Saskatchewan but I am asking the question because I believe it is pertinent and I think the minister should answer it. It is all very well to say that in the letting of contracts each province must get its fair share, but that suggestion must be qualified. I think it is a matter of a fair share under the productive circumstances of the province, and I think that is what the minister has in mind. You cannot give contracts to people who are not capable of handling them. Take the matter of electrical power. There are some provinces that might be short of electrical power. They may be running at capacity, and there is no use bothering. I think we have got to be fair in our analysis of the ratio of contracts.
Personally I have no particular criticism or complaint to make, and that is partly due to the experience I had during the last war. I do not believe I went to the government once to ask them to push anything my way. I do not believe I did. I went to various officials of the government and laid the cards on the table with respect to certain things. I know that during the last war I had six air training or auxiliary schools in my constituency.


An hon. Member:: What are you kicking
about?


An hon. Member:: You did well.


Ernest George Hansell: I remember on one occasion I told a Liberal I had that many and' he said: "My goodness, what pull have you got with the government?" I answered that by simply telling him that his constituency was ini a mountainous region, and it was obvious that you could not put air training schools in a


mountainous region. I think that the government was pretty honest and fair in their locating of air training schools when they put six of them in my constituency, and I am not the only member from Alberta who had such schools in his constituency. There were many others. I think the engineers were honest in their appraisal of territory, climate, winds, and everything concerning the training of airmen. Of course there may have been another reason. They may have thought that if there was an attack Alberta, and Macleod particularly, would be blown to kingdom come, but I think that would be stretching the imagination.
I have no particular criticism to make in the matter of contracts. However, I come to the first item now before us, and I believe that the minister must give us a more detailed break-down. I refer to the item of $5 million for departmental administration. The $5 million is not involved in the paying of contracts or paying for defence production. It is simply administration of the department. Five million dollars is a lot of money simply to administer a department when they are not buying anything. I have compared it with other departments of government. Possibly my comparison is not altogether fair for the reason that all departments do not break down their administrative items in the same fashion. Of course this department is new, it has been set up just this session; but I look at some of the other departments. Here is agriculture, and the first item for administration amounts to about three-quarters of a million dollars. Here is citizenship, about a quarter of a million; here is external affairs, two and a quarter million; here is fisheries, a little over a quarter of a million. Justice is about three-quarters of a million and labour a little over a half million. Here is finance, one and a half million. Of course there is another item under administration that I should mention, the comptroller of the treasury for which there is the considerable sum of twelve million. Here is mines and technical surveys, and the item for departmental administration is less than half a million. Here is health, less than half a million. Post office is less than half a million; public works less than half a million; trade and commerce a little over half a million; transport over a million, and veterans affairs two and a quarter million for administration.
When we come to this Department of Defence Production, however, we are staggered with a figure of $5 million. I thought I would like to see what that covered, so I turned to the break-down on page 143. The

first large item I find is $3 million for temporary assistance. That is a very nebulous explanation. I may be quite wrong, but I am inclined to think most of those people would be doing office work, administrative work of that sort. Some of the other items are also rather startling. Here is $200,000 for postage. I do not see how the department will spend that much unless it is going to send out a lot of literature to all the citizens of the country. You can buy a lot of stamps for $200,000. The minister may say that of course this is just paid by one department to another, but let us remember that the taxpayers of this country will have to pay on the basis of the total amount of these votes. Here is $200,000 for telephones and telegrams. That is a lot of money for telegrams and conversations over the telephone. Then the last item making up the $5 million is sundries, $250,000. I do not know what sundries there can be to make up that amount. Of course I know that in these days a million dollars seems to be just peanuts. The other day I was sitting in the gallery with a visitor, rather an intelligent person, I thought, and she seemed disgusted with the way we discussed and handled these astronomical amounts. Her comment was, "My goodness, and we are the ones who have to pay". Of course I know that is not quite the picture, but that is the impression one gets sitting in the gallery while we are dealing with these matters. If you go out in the country and say this department has paid $3 million for temporary assistance they will scratch their heads and ask how many stenographers they are putting on. That is their conception of it: my goodness, they must be employing a lot of temporary workers. Postage, $200,000: my goodness, something is going down the drain. That is the impression people get.
I believe the minister should give us a more or less complete break-down. I know he spoke this morning, and I am going to analyse his rather lengthy speech tomorrow, when it comes out in Hansard; but I believe the people of Canada need a little more information as to why the administration item for this department should be so large. That item has nothing to do with the contracts ultimately signed, whether for guns or anything else. The people pay for them, and the contracting parties get their profit. But in order to put those contracts through it is costing the country $5 million for administration. I think the minister owes it to the house to give us some further explanation; and when he replies I hope he will not forget the other question I asked as to whether the picture would change if Mr. Tucker got into power.
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Supply-Defence Production


Clarence Decatur Howe: To take the serious part of the question first, my hon. friend overlooks the fact that there are no items in the estimates for branches in this department. If he will check all the departments he mentioned and add to the administration item the cost of. those branches that have separate allocations of funds I think he will find that $5 million as the cost of operating the Department of Defence Production is not excessive. He speaks of $3 million for temporary assistance.
I remember that he applauded loudly when I said that everyone in the department was temporary. It is a temporary department; no one has permanent status nor can anyone attain it. As I said this morning, there are roughly 1,100 people in the department. At $3 million that would give an average of about $2,700 per person, which I do not think he would say is exorbitant. At least I am sure the hon. member for Winnipeg North Centre would say that was a very low salary, for I believe anything under $5,000 is low to him. So I hope the hon. member will agree that to operate a department with 1,100 people for a year, $3 million is not exorbitant. Will he go that far with me?


Ernest George Hansell: Yes, I will go that far; but what I want from the minister-


Clarence Decatur Howe: That is all I wanted to know. The hon. member wanted an answer to that question and I just asked if he would agree with me.


Ernest George Hansell: Well, I want a yes or no answer to the Tucker question.


Clarence Decatur Howe: We will get to that. Then my hon. friend mentioned $200,000 for postage and thought that was a tremendous sum. Yet everyone here wants us to go into all the small industries of this country with all the tenders, and we try to do that; but it takes a lot of postage. I do not know how many tender forms we send out in the course of a day but I dare say it runs into the thousands, and each one carries a stamp. We estimate what it costs to do that business properly. I see that my hon. friend from the potato fields is very much amused. I must say I enjoy his contributions to these debates because they are so sensible, and his laugh is the most sensible contribution he makes. We will talk about potatoes some other day, and my hon. friend can join in that debate with something besides a laugh.
Then the hon. member mentioned telephones and telegrams. Well, this year I suppose we are doing a business of over a billion dollars. This is a large country; a good many questions are asked the department, and a

Supply-Defence Production good many calls are made. If the hon. member will look into other departments and consider all the various branches I think he will find that is not an unreasonable telephone bill for a year for a department doing the amount of business we are doing.


Stanley Howard Knowles: And that includes your
offices across the country?


Clarence Decatur Howe: Yes. We have offices in every large city as well as in Washington. These are the total expenses of operating the Department of Defence Production, and I suggest they are not excessive. In fact I may be back in the fall for a little more money, because the department is somewhat larger than we thought it would be.


Ernest George Hansell: Mr. Chairman, before the minister leaves that, let me point out that my criticism was not so much of the amount [DOT]of $5 million. My criticism was that the break-down did not give us information that 3 think we should have. I quite agree with the minister that that item is not broken *down into departments the same as the other government departments are broken down, and that is the reason that it appears as $5 million for administration.


Clarence Decatur Howe: Mr. Chairman, may I point out that other departments of government have a background of experience. This is a new department. We had only a very indefinite idea of how large a personnel would be required. We simply said that one thousand persons at $3,000 each would be a reasonable estimate of the salaries, and we estimated forty per cent for. overhead, which is about normal for other departments. We put in the estimate on that ground. After we have been operating for a year or two, I think we will be able to give you a break-down in considerable detail.


Ernest George Hansell: Now, would the minister answer the Tucker question?


Clarence Decatur Howe: My hon. friend has brought politics into the discussion. I may say there are no politics in the Department of Defence Production. I do not understand Alberta politics. I do not understand why Albertans send the political representatives that they do send here, and I am not altogether clear about Saskatchewan politics. I would suggest that if he would wait a year or two he will have a chance to find out. After a Liberal government is in power in Saskatchewan, he can form his own conclusions on that area.


Mr. Harrison:: I am pleased to see that the minister has not been overcome by the gloomy speeches we have had from the other side. His last statement indicates that
is so. We have had two or three speeches from Saskatchewan members saying that we have not had a share of defence orders in that province. I do not think the minister is in a position to place many orders in that province. He has to have defence materials now, and we are not in a position to give him those materials, being an agricultural province. I would gladly trade any possibility of getting defence contracts for an indication from the minister and the government that they would go ahead with the Saskatchewan dam. Then, when that is completed, we would be in a position to talk about contributing something in the line of materials that could be used for defence.
It was also suggested by the three members I mentioned that the policies of the minister and this government are contributing to taking people out of Saskatchewan. I find that the opposite is the case. As a matter of fact, the very fine.policies of the Minister of Trade and Commerce are going to put some five or six thousand people in my riding within the next two or three years. In 1948, not one person lived in that area. I am speaking of the northern part of my riding. The policy with respect to uranium production under Eldorado Mining and Refining at Beaverlodge lake will mean additional population. They went in there in 1948 for exploratory work. Since that time the government has spent something like a million dollars a year there, and I was pleased to hear the announcement in the house today that they would spend $2 million there this year. I understand that in 1952 they will send in a mill, and it will be in operation in 1953 to reduce the ore and concentrate it for shipment.
As I say that is distinctly at variance with the opinion of my friends who believe that the policies of this government are taking people out of Saskatchewan. I believe if they were to look over the policies of the provincial government in Saskatchewan, as run by their own group, they would find they are taking people out of the province. I should like somebody to tempt me to cite some cases. I do not need to explain it so far as my constituents are concerned, because they are well aware of the fact. To give you just one instance, in the timber industry in my particular riding the policies of the government of the province of Saskatchewan have materially affected the population. They have a policy whereby the timber must be delivered to the provincial timber board. According to provincial government returns last year, it must be delivered at an average price of $30, and must be delivered to the nearest government lumber yard which might be fifty miles away. Hon. members
fMr. Howe.]

will know that you cannot produce lumber for $30. In the immediate vicinity of Meadow Lake, thirteen mills moved out to Alberta. On being advised of this the minister of natural resources said he was glad to hear of it, and it was good riddancef Those are the policies these gentlemen follow.
I should like to suggest to you that if federal policy ran along parallel lines we would soon not have any people in the province at all. I want to thank the minister sincerely for the effort he is making in my riding, because it is going to have a great effect on the population in the next two or three years. We are now in the atomic age. Uranium is a top commodity the world over. We hope it will not always be used for destructive purposes. It has already been used for medical purposes to humanity's great benefit. I want to thank him for his policy, and for the great benefit it has been.


Stanley Howard Knowles: I would be grateful if the minister would expand a bit on what he had to say this morning with respect to the mechanical transport division of his department. The reason I express that desire is because, as the minister knows, both management and employees of the automotive industry are concerned about their situation. When the minister was speaking this morning he said that orders had been placed for 456 three-quarter-ton military trucks, and 780 two and a half ton military trucks. As I understood it, no other firm orders had yet been placed by the mechanical transport division, although he said that the Ford people were studying the quarter-ton, four by four jeep.
Now, as the minister knows, delegations have been coming to Ottawa representing both management and employees in the automotive industry. In fact, representatives of the United Automobile Workers are in Ottawa today. They are, in fact, genuinely concerned about the employment situation. They point out that there are three things that are affecting their situation. One is the volume of defence orders. Their claim is that there do not seem to be enough orders for defence production to take the place of civilian production, which it seems to be the desire of the government to curtail. The second factor that interests them is that of the supply of steel. I understand that one of the automobile plants has as large an inventory of steel as it has ever had, but some of the other plants are facing a shortage of steel. There is, in addition, a third factor which concerns them. While it does not come directly under the minister's department, still it is related to the whole problem, and I am sure he must be interested in it. It is the impact of credit
Supply-Defence Production controls. These employees, the members of the union, as well as the management, point out that the effect of stringent credit controls is a lessening in the purchase of new cars. That results in the supply of new cars piling up and the fear that there may be layoffs. No one suggests that we should facilitate the manufacture and the purchase of new cars by easing credit restriction and by other means, if that plant and equipment and those men are needed to produce defence materials. But if defence orders are not being placed they feel that steps should be taken to make sure that these employees are kept on the job.
That would seem desirable not only from the standpoint of the men themselves, which in my view is a major consideration, but also from the standpoint of defence. It is no help to the defence program if important plants, such as our automobile plants, are allowed to stand idle. I have every confidence that this matter is of concern to the minister, and -that he and his department are giving attention-to it. I must say however that, having had representations from the members of the United Automobile Workers who are in town today, when the minister spoke this morning and gave these figures that I have repeated, namely, 456 trucks of one kind and 780 of -another kind, it did seem to bear out their statement to me that the orders being placed with the automobile firms in Osh-awa, Windsor and in other places here in Ontario really provide work for only a very few weeks.
I need not spell the problem out in any greater detail than -that. It does seem to call for consideration, I would s-ay, of the points they have emphasized, namely, the question as to what defence orders are in prospect for automobile plants, the question of the supply of steel and also the question as to whether or not the Minister of Defence Production might recommend to his colleague the Minister of Finance a relaxation of the credit controls on the purchase of cars.
There is another subject that I want to raise, which is completely different. I would be -glad if the minister would comment at this-, time on the automobile employment situation..


Clarence Decatur Howe: I -gave the size of orders forautomdbile equipment that have been filed, with the department so far. My hon. friend will understand that the Department of Defence Production does not initiate orders; for fighting equipment. These come from the services. The fact that the army is not using its own vehicles in any combat area of course limits the number of vehicles that the army requires for its present purposes. We are, however, tooling up to provide for substantial production of two types of

Supply-Defence Production vehicles, namely, the two and one-half ton truck and the one and one-quarter ton 4x4, and we hope shortly to settle the provision of tooling for the jeep, which has been a troublesome matter from the start, but which I think is practically in hand at the moment. We must tool for large production. In the last war the vehicles program was the largest program we had. We built some
800,000	vehicles, if my memory serves me right. In case of war it will again be a very large program. But one of the difficulties about defence production is that we have to be ready for any eventuality, but we can only produce to meet the requirements that come to us from time to time.
It has been suggested that the automobile companies are in trouble due to the lack of steel. I told the workers when they were here before that they would not be cut off from steel, and so far as Canada is concerned the automobile companies have been getting the same amount of steel they were getting before.
I think we might as well face the fact that any difficulties experienced by the automobile industry are due to the fact that they produced far more cars in the first three or four months of this year than they bad ever produced in their history. Everyone knew that the budget was coming down in April, and everyone tried to buy a car before the budget came down because nearly everyone expected that the tax would be increased on cars as it was in the previous war. Now that expectation has been realized. The budget has come down and there is an increased tax, and most people have new, cars. I never saw so many new cars around Ottawa in my life as I can see today. If you walk down the street here today you will see numbers of new cars. People who have not got new cars do not intend to buy them -this year. Perhaps they will do so next year.
There is ia limited demand for cars. I suggest that anyone who suggests that the change in the tax structure has had really no effect on the situation is not being realistic. However, taxes are out of my department and I do not care to discuss them.


Stanley Howard Knowles: I could have spoken about
taxes, but actually I spoke of credit controls.


Clarence Decatur Howe: I do not think that is the
underlying difficulty.


Stanley Howard Knowles: I still hope the department will review this serious problem and try to find some way to maintain a balance between defence needs and civilian needs, bearing in mind the desirability of keeping these men at work.


The other question on which I should like the minister to comment a little further- again this is something that he spoke about in his statement this morning-is the newsprint situation. I asked him yesterday if he would comment on that matter, and he said he would do so today when his estimates were before the house. As I listened this morning it seemed to me that in the main he dealt just with the desire of France for a quantity of newsprint, and with arrangements for meeting that request with as little impact as possible upon the producers and consumers of newsprint in this country.
There are other aspects of this problem in which we are all interested. One might anticipate a statement from the minister with regard to the price situation, particularly in the light of the newspaper reports lately on the attitude taken by the United States, but I am also interested, in fact even more so, in the supply situation here in Canada, having in mind particularly the needs of small newspapers.
It has been represented to me specifically by three or four small newspapers that they are having difficulty placing contracts with the producers and suppliers of newsprint in this country. The position taken by the companies that supply newsprint is that they have entered into contracts that exceed what they can produce; but it is still hard to explain to the small newspapers in Canada that in this country, which is perhaps the world's greatest producer of newsprint, it is not possible for them to get a reasonable share. It does not seem to be any problem for the large daily newspapers to get their supplier, although I understand that even some of them are complaining about the price, and that should be looked into as well. I should like it if the minister would say whether there is not some way in which his department, now that newsprint control is in effect, can see that these small papers get the supplies that they need.


Mr. Harris (Danforlh):: Perhaps I could
ask the indulgence of the hon. member for Winnipeg North Centre to hold his newspaper comment for a moment or two and let us finish up with the matter of steel.


Stanley Howard Knowles: All right, provided the
minister will come back to it later.


Joseph Henry Harris: Quite right. Ordinary continuity in the debate might expedite matters. Before leaving the matter of steel, which was mentioned by the hon. member for Winnipeg North Centre, who knows everything about everything, perhaps some of us who know something about nothing may be permitted to say a word or two.

I am taking this opportunity to congratulate the minister on his quiet and orderly attitude towards these problems which have come to our attention lately. I am also happy to have him in such good mood. Perhaps he will not object too much to our finishing up the matter of steel before we go on to the matter of newsprint. Not very often do we find a member from an opposition party congratulating the administration or any member of the ministry on the way it handles problems. However, in connection with the administration of the supply of steel I understand the minister's difficulty, and I believe the minister realizes that I understand it.
But steel for motorcars is not half as important, to my mind, as steel for buildings of one kind or another that will not only house our people but will help build institutions of the kind required in the $30 million program of the Minister of National Health and Welfare. Institutions of that kind will help restore health and strength to our community.
I am sure the minister who is in charge of the distribution of steel is in harmony and sympathy with the projects in the program of the Minister of National Health and Welfare, and I am sure he will see to it that steel is provided for those projects directly connected with the welfare of our Canadian people. Those institutions are necessary so that we may house and accommodate those thousands of people who, through no fault of their own, find they must go to them.
While I make this plea now, Mr. Chairman, I realize that it is granted even before I ask it. However, I do ask that the minister see to it that these institutions, many of which are voluntary, have sufficient steel. In this way hospitals which have been dreamed of may now become a reality through the minister's administration, and through the $30 million program of the Minister of National Health and Welfare.
Let us develop this point one step further. Let us see that steel is made available for nurses' homes, which are so necessary if the nurses are to have accommodation in those hours when they may rest. In contrast to a use of this kind, I draw the attention of the committee to the use as exemplified in the building of motorcars. Let anyone take a look in Windsor or in Oshawa and he will see miles upon miles of new cars. Are they necessary, or are our nurses' homes necessary? Are they necessary, or are our hospitals necessary?
When we think of steel requirements our minds turn to those essential projects so necessary for the welfare of mankind, so that
Supply-Defence Production there may be a sufficient number of hospital beds, proper accommodation for nurses, and other ancillary buildings. I would ask the Minister of Defence Production to think of his colleague with the $30 million who is trying to do a job.
I know the minister, whose estimates are now under consideration, will see to it that priority is given to those human requirements which are so much more necessary than the miles and miles of new motorcars one sees lined up on the streets of cities throughout Canada, and particularly east of Oshawa for a distance of a mile and a half.
I do not know whether all those motorcars are necessary; perhaps a little walking, a little more exercise, would do us some good, rather than always to drive in motorcars. But I do know these hospital requirements are necessary, and I am sure I do not need to impress that fact upon the minister. He is a sensible kind of man, Mr. Chairman. He knows the circumstances, and he supports all of us who are interested in these humanitarian endeavours.
I am sure that in his administration first things will come first, and that these other things which you, sir, and I, as younger men, did not expect would come into existence in our day and generation, will not be considered so necessary. Indeed, one of these days we may find that our grandchildren will not need legs to walk around on, at all. We do not need all these automobiles; we do not need all this steel for the automobile industry; but we do need steel to build institutions so necessary for the welfare of our people, if they are to be cared for properly and in an orderly manner.
I have risen to speak at this time because I did not want steel to go by the board without first making some representations from one branch of our economy which is so necessary. After that will come the myriad of things connected with industry.
But let us have first things first. I thank the hon. member for permitting me to turn the discussion away from newsprint for a few moments. I am pleased to have this opportunity to place the facts before the minister, although I am sure he understands them. I urge that he permit his colleague to proceed with his $30 million program, so that we may have a few more institutions to take care of our people, and so that we may have more nurses' homes, laundries and all those other buildings which are required in this modern age.


Clarence Decatur Howe: Mr. Chairman, the department is doing its best to take care of all steel requirements and, in doing so, is not overlooking the need for hospital accommodation.
4102	HOUSE OF
Supply-Defence Production The difficulty is that the demand appears insatiable. We are trying to take care of first things first, and I believe we are having some success. I believe, too, that we have some of the ablest men in the steel business assisting our steel controller and trying to stretch the steel available sufficiently to take care of requirements.
The story with respect to newsprint is quite interesting, I think. Since the last year of the war the industry has been doing its best to meet demands for Canadian newsprint, which have been coming from domestic sources and from abroad, but has never quite succeeded in doing so.
Canadian publishers in 1950 received 84 per cent more newsprint than the average consumption of Canadian newsprint during the war years 1939-45. Compared with the last year of wartime conditions and rationing-that is,	1945-Canadian	publishers
received in 1950 an increase of 70-6 per cent in total supply over 1945. Canadian consumption in the last four years has been as follows:
Consumption
Year	of Newsprint
tons
1947	 275,000
1948	 306,000
1949			335,000
1950		' ..	355,000
Canadian consumption in the first four months of 1951 was 116,323 tons as compared with 114,787 tons in the first four months of last year. Canadian consumption is still rising. The continuation of this increased rate of consumption cannot be assured because of the reinstatement of some of our overseas obligations, particularly to the commonwealth and because of special shipments we might make as a result of recommendations by the international materials conference. However, it is expected that supplies for Canadian consumption in 1951 will be close to the record quantity of
355,000	tons provided in 1950.
Canada has been increasing its newsprint production but it has been faced with a peculiar situation. The price structure has not risen at a rate comparable with that of other paper products. It is a strange thing, but today in the United States market the pulp content of a ton of newsprint will bring more money than a ton of finished newsprint notwithstanding the expense of finishing and packaging. In other words, the pulp content of newsprint brings a higher price than the newsprint itself.


Mr. Browne (St. John's West):: Is that Canadian pulp?


Clarence Decatur Howe: Yes, sulphide and groundwood pulp. The pulp that goes into a ton of newsprint will sell for more as pulp than the newsprint will sell for after the pulp has been put in and the paper finished and packaged ready for shipment.


Ernest George Hansell: Why is that?


Clarence Decatur Howe: The users of newsprint have a very potent lobby, if you like. It will be noticed that whenever there is an increase in the price of Canadian paper there are congressional investigations in the United States and we have extravagant statements made, such as appear in the papers today, by senators and other responsible United States public men.


Stanley Howard Knowles: The newspapers' case gets space in the newspapers.


Clarence Decatur Howe: They are apt to do that. I think the last increase in the price of newsprint was in November, 1950, and up to that time there had not been an increase in the price for two and a half years owing to the fact that the mills had been made more efficient and additional production was obtained without corresponding capital investment. It was thus possible for the mills to absorb the increased costs, and costs have increased for everything they use, without making any substantial increase in the price of newsprint.


Mr. Hatfield:: Can they find a market for all the pulp they could manufacture?


Clarence Decatur Howe: Perhaps not. They have not tried to sell it that way. I am simply saying that they could sell it that way if they wanted to. Since the termination of world war II price controls in the United States, newsprint prices in that country have advanced 26-2 per cent. In comparison, since the end of controls in the United States, book paper prices have advanced 54-3 per cent; craft paper prices have advanced 63-1 per cent; paperboard prices by 91-2 per cent; and tissue papers by 93-4 per cent. If the price of newsprint had risen since decontrol as much as the United States government pulp and paper index, newsprint prices would now be $143 a ton instead of the announced price of $116 per ton. If the price had risen as much as the weighted average index shown for the four major grades, the price would now be $145 per ton.
The effect of this has been that no new major capital expenditures have been made. There have been ten major pulp developments in Canada since the war but there have been no major newsprint developments. The result is, as I have said, the price of pulp is greater than the price of the same pulp put into newsprint. Another

effect has been that United States mills which formerly produced newsprint have been converted to the production of more profitable lines, such as tissue papers, wallboard and products other than newsprint. The brunt of furnishing North America with newsprint has fallen very largely on Canada.
It is a fine business, but at the same time I think the business is entitled to a price for its product which will allow it to grow and keep up with the demand. Recently the newsprint industry has been faced with a reduction in the work week from 48 hours to 40 hours and in addition to that there has been an increase in the weekly take-home pay. It has been faced with increased costs for its woods operations and for all supplies that it has to buy.
When we were informed that the Abitibi paper company found it necessary to declare an increase in the price after July 1, the situation was explored carefully because we knew from experience the political repercussions that would follow any change in the price of newsprint. The matter was referred to the economic committee of the cabinet whose report was considered by the full cabinet. In view of the facts disclosed by our own officials we felt that we could not object to the $10 increase which the industry, as represented by Abitibi, found necessary and therefore we took no action in the matter.


Stanley Howard Knowles: I thank the minister for the statement he has made, but there are two or three questions I should like to ask. The minister gave both percentages and absolute figures concerning the consumption of newsprint within Canada since the end of world war II. Has the minister comparable figures showing the quantities of newsprint that have been exported from Canada?


Clarence Decatur Howe: The quantities exported to the United States were as follows:
tons
1947	  3,685,000
1948		   3,881,000
1949		 4,056,000
1950	  4,302,000
First quarter, 1951	 1,042,000
The Canadian consumption of newsprint has gone up steadily. In 1947 it was 6-9 per cent of all paper consumed in North America; in 1948, 7-3 per cent; 1949, 7-6 per cent; 1950, again 7-6 per cent; and for the first quarter of 1951, 7-8 per cent.


Stanley Howard Knowles: I thank the hon. member for these further figures. In fact it was the last figures that I was anxious to get. Now another question. Is the price obtained for newsprint in Canada the same as is obtained for newsprint exported to the United States?
Supply-Defence Production


Clarence Decatur Howe: It is a trifle less, the differential being a survival of war controls. I think it is $4 per ton less at the mill for newsprint supplied to Canada than for newsprint for export.


Stanley Howard Knowles: I have one other question. I note that there has been a fairly substantial increase in the absolute number of tons consumed in Canada, 275,000 tons in 1947 and
355,000	tons in 1950. It would appear that the figure would be about the same for 1951. It is 116,323 for the first four months, and if you multiply that by three it comes out close to the 1950 figure. I should like to know whether the minister can give any sort of idea as to how that increase has been divided between the large dailies and the smaller papers, both dailies and weeklies, that are trying to get established. I have in mind three or four smaller papers that: report considerable difficulty in getting the newsprint they need. They are aware of the fact that there is such a thing as newsprint control, and that there have been these increases in newsprint consumed in Canada. Is there not some way in which, in view of the increased quantities that appear to be available for consumption in Canada, these smaller papers can get their proportionate share?


Clarence Decatur Howe: It is difficult for every newspaper in the world to get additional newsprint. There is hardly a week goes by that there are not two or three important publishers from somewhere in the world in my office demanding that we give them an increased amount of newsprint. My hon. friend knows there is newsprint on the New York market selling for around three times the price of contract newsprint just because it is free newsprint. It is not easy to take care of new demands because they come from every quarter in the world. I think Canada is perhaps losing more good will through newsprint than anything else because we cannot take care of the requirements of all countries that think we should help them out in this situation. I have gone into the matter pretty carefully, and I believe our industry is trying to do a real job with Canadian newsprint. Certainly no Canadian contract has ever been varied as far as the news trade is concerned. Two or three years ago, shortly after the war, any newspaper could contract for all the paper it wished, and most newspapers did contract directly with the mills for their supplies. These contracts have been taken care of and increased from time to time as the situation warranted. However, I think the newspapers to which my hon. friend refers are taken care of ordinarily by jobbers. There again I think the jobbers try to take
4104	HOUSE OF
Supply-Defence Production care of the situation that they are supposed to take care of, weekly papers and papers with small circulation.


Stanley Howard Knowles: Do jobbers handle newsprint that comes in rolls?


Clarence Decatur Howe: Oh, I think so. I cannot say definitely. I am not a technician in the newsprint business.


Stanley Howard Knowles: I do not think so. As to newsprint that comes in rolls, there are small papers-not the smallest in the country-that require rolls to produce their publications, and it is that type to which I refer.


Clarence Decatur Howe: I cannot say. A committee representing the weekly newspapers association came to see me a while ago saying that they would like more newsprint. I asked them who their supplier was, and they mentioned one or two jobbers. I do not know about newsprint in rolls, but I know that the industry is very anxious to take care of legitimate requirements of Canadian newspapers. I think they have gone to quite unusual lengths to do so considering the pressure that is on them from other sources to supply more newsprint. If there are hardship cases, and if they are brought to my attention, I will be glad to have them examined by the proper authorities.


Stanley Howard Knowles: I thank the minister for that assurance.


Heber Harold Hatfield: Could the minister tell us what the increase is for other paper products in Canada besides newsprint?


Clarence Decatur Howe: I do not know.


Heber Harold Hatfield: Paper boxes and bags.


Clarence Decatur Howe: I have not that information. About 1,250,000 cords of pulpwood, which would be sufficient to produce over a million tons of newsprint, went into products other than newsprint, that is pulps, wallboard, and products of that kind.


Mr. Murray (Cariboo):: Would the minister consider a priority with respect to steel for a paper manufacturing plant contemplating operating at Prince George, B.C.?


Clarence Decatur Howe: There are no priorities for any industrial use except direct defence use or defence supporting. There are three or four pulp mills being built throughout the country, and they are getting on quite all right without any priorities. I dare say if the people at Prince George wish to build a pulp mill they can get on all right too. There are no official priorities for that class of work.


Howard Charles Green: I understand that defence contracts from countries other than Canada come

under the jurisdiction of the Department of Defence Production. Could the minister tell us the situation at the present time with respect to defence contracts from countries other than Canada, and particularly from the United States? I believe that these contracts have not been up to expectations. Perhaps the minister could give us a statement with regard to that.


Clarence Decatur Howe: I could give the figures but they are rather misleading. The reason why our purchases from the United States have been high is that we need finished munitions, and they have finished munitions. The reason why their purchases in this country have not been as great is that, while they are quite willing to buy here, we have not the finished munitions to sell them. We have taken substantial orders, and they are coming in at an accelerating pace. Over a period I think there will be a reasonable balance. There is every will in the world to carry out the spirit of the agreement entered into some months ago. However, I think it would be unwise to give the figures on the orders that we have obtained from outside the country, or purchases from outside the country.


Howard Charles Green: The minister can give no figures either for United States contracts or from other countries?


Clarence Decatur Howe: There are practically no orders for munitions from other countries that involve payment. Of course other countries are buying raw materials and paying for them, but any munitions that are going to Europe are going as a part of our contribution to NATO. The cash purchases come from the United States. They amount to a very respectable sum, but I would not care to give a figure at the moment. I think it will be fairer to the United States to wait a few months until the impact of the negotiations now under way is fully realized.


George Alexander Drew: With relation to that particular point, I wonder if the minister could give us some indication as to the extent to which there is agreement on certain types of equipment. Let me take as a specific example the walkie-talkie used for military service. I understand that orders have been placed in Canada for substantial numbers of these sets as the result of an accepted design which is regarded as a very favourable design for this type of military equipment, and that the order is on a scale that contemplates the disposal of a large quantity thereof in the United States. Can the minister say whether they have actually agreed to take this equipment from us or whether it is simply in the speculative stage at the moment?


Clarence Decatur Howe: Well, the walkie-talkie in
question is really in the development stage now. The design has been discussed with a committee representing the ABC countries, and there is agreement that the design, which originated in Canada, will, if it can be brought from the development stage at a reasonable price, be standard equipment for the three countries. But we have not solicited orders for the time being. We placed an order ourselves for 50,000 sets, but we have not solicited orders from other countries nor would we be in a position to do so until we could show them a finished prototype.


George Alexander Drew: Then I understand from the
minister that 50,000 of these new sets have been ordered, and my information is that it is a highly efficient set, which has been developed by our own research organization. I think the minister will agree that Canada itself would not have use for more than 5,000 of these sets at the outside.


Clarence Decatur Howe: That is correct.


George Alexander Drew: If we have placed an order
for 50,000 and we could not use more than
5,000	ourselves, does this represent the absence of a sufficient measure of agreement as between the NATO countries, if we have placed a definite order for ten times what we can use without a commitment on the part of our associates to take the sets?


Clarence Decatur Howe: No, it does not represent that.
It represents a belief on our part that the requirements of the three countries will run to 50,000 sets, and that if this set is all it is believed to be at the moment by the experts of the three countries those 50,000 sets will be in demand. If it is not up to the mark, if the set does not perform as the three countries believe it will, production will be stopped and Canada will absorb the development expense. Certainly Canada would not place a large order for walkie-talkie sets it could not use. The orders we have placed at the moment are tentative and will be confirmed if the set when actually produced lives up to its promises.


George Alexander Drew: The information the minister
has given confirms the information I had received, which prompted my question. This brings me back to certain remarks I made earlier in the day. The minister will correct me if I am wrong, but I understand the United States is actually proceeding with the construction of another walkie-talkie set.


Clarence Decatur Howe: That is right.


George Alexander Drew: If that is the case then are
we not seeing evidence here that even at
Supply-Defence Production this stage of the development of our defence program for this emergency we are not reaching agreement quickly enough in regard to vitally important questions of supply? Is that not right?


Clarence Decatur Howe: Well, I think the United States walkie-talkie now being developed is based on the same design as our own; but even with respect to walkie-talkie sets, which are fairly important pieces of war equipment, I do not think the United States would depend entirely upon a source of production outside the country. The United States usually follows the practice of having two sources of supply, even though both may be in their own country. I think everything being produced for the United States in Canada is a second source of supply to a source within the United States.


George Alexander Drew: The minister has explained
that the requirements of the NATO countries are estimated at 50,000 sets, which is the order already placed with a Canadian producer. If that is so and the United States
is,	as I understand and as it would seem the minister agrees, proceeding with the production of another type of walkie-talkie which has substantial differences to that we are producing, then it would seem that this would greatly affect the total number we might sell, having regard to the fact that obviously the United States would be the largest consumer of that type of equipment. I mention the walkie-talkie not because I am suggesting-


Clarence Decatur Howe: It is not a very typical
example.


George Alexander Drew: I think it is. I am not suggesting for a moment that the strength or weakness of the army is going to depend on a walkie-talkie. Nevertheless I do suggest that it is an important piece of equipment, and I also suggest that what is happening in this case is illustrative of a difficulty that is being encountered in getting decisions, and that in many cases certain jealousies as to who shall produce a certain article are entering into these decisions.
I come back to what I said earlier. The minister has indicated that Canada has been forced to delay the actual commencement of production of rifles and machine guns because of the failure of the governments of the United States and United Kingdom to standardize on one accepted pattern. I thought I made it clear this morning that I was not criticizing the Canadian government for any failure to achieve uniformity in that case, because this government could not do
it.	I was urging the Canadian government
4106	HOUSE OF
Supply-Defence Production to use its good offices to seek a further meeting, and to impress upon the other governments our feeling of urgency in regard to this aspect of the problem. The minister mentioned the fact that there had been agreement in regard to the standardization of some fourteen types of weapons.


Clarence Decatur Howe: I do not want to mislead my
hon. friend. The Minister of National Defence says that about four hundred items have been agreed to, but of those fourteen are important and the others are minor.


George Alexander Drew: There is a vast difference, of
course, between the four hundred items and the weapons. We all know what the important weapons are. We know that as yet there is no agreement in regard to rifles and machine guns. When we speak of standardization, it has its primary effect upon the organization of the land forces. The next weapons we come to are the artillery weapons. Today the minister explained that we have decided to adopt the 105 millimetre and 155 millimetre howitzers in place of the 25-pounder and the 5-5 howitzer. I understand, and I would wish to be corrected if I am wrong, that there is not an agreed standard between the governments of the United States and the United Kingdom in regard to those weapons. Is that correct?


Clarence Decatur Howe: I bad the other understanding, but I do not want to be too positive. I think at the moment we are discussing a good deal of classified material. I can tell my hon. friend, if it will comfort him, that we are making 155 millimetre howitzers for the United Kingdom, so I assume that is a standard.


George Alexander Drew: Is that on a firm order?


Clarence Decatur Howe: Yes.


George Alexander Drew: The reason I ask is because
it might be on a firm order or it might be on the same basis as the walkie-talkies.


Clarence Decatur Howe: No.


George Alexander Drew: Surely the minister must know whether in fact there has been agreement. After all, these are not merely decisions of two nations; they are decisions that affect NATO preparations. I know this has been under discussion, and I know there is agreement as to the desirability, but surely the minister is in a position to say whether in fact there is formal agreement between the government of the United States and the government of the United Kingdom that the 105 millimetre and 155 millimetre howitzers will be the standard weapons.


Clarence Decatur Howe: In the first place, I am speaking about a matter that my bon. friend will 

appreciate is not my concern. That is a matter for the armed services. If I said there was agreement, I would be saying what I believe. If the hon. member asked the source of my information, I could not tell him. I can only say that the army does not ask us to go into large soale production on an item which has not been agreed upon among the three countries, and we have been asked to go into large scale production on the 105 and 155 millimetre guns. So I am assuming that they are standard to the three countries. I think I am correct in the assumption, but I am not the man to answer that question. In fact, the whole matter of standardization is outside my province. It is a matter for the armed services.


George Alexander Drew: Mr. Chairman, the Minister of Defence Production has indicated the very close association of these two departments in all that they do. The activities of these departments are closely interlocked by virtue of the fact that the Department of Defence Production is the department which interprets in terms of actually finished articles the requirements of the Department of National Defence. The Department of National Defence establishes its requirements, and the Department of Defence Production then takes steps to bring those requirements into production. It seems to me that in the discussion of defence production this is directly related to the effectiveness of what we are doing, and this is the appropriate time to emphasize the tremendous urgency of some decision in regard to standardization. Whatever minister is responsible, the government itself should be ready to take whatever steps are necessary to seek some conclusion in regard to standardization, if in fact the emergency is of the nature that has been explained to us and that justifies the tremendous sum of money we are called upon to approve.
I know that the Minister of Defence Production did not seek to convey the impression but unintentionally the suggestion was left that we have not achieved standardization in regard to only two of the weapon categories, rifles and machine guns, whereas we have achieved some measure of standardization in other fields. I would point out that the infantry is still the most important segment of the whole defence formation from the aspect of the occupation and holding of any area. To a large extent the character and ultimate form of all our defence forces is determined by the organization of the infantry and the other land forces. The characteristics of these land forces are largely decided by the type of weapons they possess. For that reason the rifle and the machine gun are, in fact, the basic equipment of the whole defence

system, although they may appear to be relatively unimportant weapons in themselves as compared with aerial bombs, mortars, field guns and equipment of that kind. The aircraft and even the ships are simply methods by which the power of any nation is asserted for the ultimate purpose of making it possible for the infantry to do its job. For that reason I suggest it is of critical importance that there should be standardization of these weapons.
The Minister of Defence Production has stated that we are not proceeding with the manufacture of rifles and machine guns, at a time when we have been told we face this great crisis. He has explained we are not proceeding with that because uniformity has not been established between the governments of the United States and the United Kingdom.
I would ask the minister if he will give an undertaking that the Canadian government will take whatever steps can be taken to bring about a further meeting, in the hope that this may be achieved.
I hope I have demonstrated in my remarks today that I am seeking to aproach this subject conscious of what I regard as its vital importance. I have sought to divorce from the arguments I have presented on this subject some of the very strong views I hold in regard to detailed aspects of this whole problem. I have done it because I believe that if we could establish some measure of unanimity in our expression as to the immense importance of achieving these results, and if word went from here that the Canadian House of Commons had indicated fairly clearly that we felt that every conceivable step should be taken by the governments of the United Kingdom and the United States to achieve standardization now to the advantage of all members of the Atlantic community, that might produce extremely important results.


Mr. Claxton:: Mr. Chairman, I should like to support the leader of the opposition in the plea he has just made. I said something about this in the house on May 9, and it appears on page 2867 of Hansard. Canada, more than any other country on the fqce of the earth of which I know, desires standardization. We have to work with Britain and the United States, and our work, either in war or peace, is made much easier if they work together; that is fundamental. We have worked on standardization committees over the last five years with the representatives of the armed forces and civilian industry of Britain and the United States. We hoped for success. We hoped that we might achieve common standards, not only with regard to screw threads and industrial materials but also a large number of weapons. Unfortunately, that was not achieved in respect to the fundamental weapon of all, the rifle.
Supply-Defence Production
We have now the announcement of a failure to agree between Britain and the United States. Britain has announced her intention to adopt the -280 calibre for her rifle and related weapons and the United States is going to retain its present -300 calibre round or adopt another. Meanwhile we have a large supply of -303 rifles and ammunition. We believe that this is an exceedingly important crossroads. We believe that if the extreme claims made by the British for the -280 are completely admitted, and if at the same time the claims by the United States for the -300, or whatever other type they adopt, are completely admitted, all the combined advantages of the claims made by both will be more than outweighed by the loss of the advantage of agreeing on something together.
We believe that this is of extreme importance. On that account we have made representation at every level to try to bring the United Kingdom and the United States together. If this failure to agree continues, it not only affects the development programs of Britain and the United States and the countries of Europe, but far more it affects ourselves because we are a surplus producer. We can produce far more rifles or any type of equipment than we could use ourselves. We want to produce something that will be of the utmost use to all the North Atlantic treaty nations. All we ask is that there shall be agreement.
I believe the time has come when this vital matter of the rifle, and the calibre of ammunition, the type of arm common to all nations and essential in all forces, must be decided. A new approach must be made if necessary, and that is that General Eisenhower and the standing group should be asked to call into consultation the nations concerned to see if they cannot reconcile their differences. Agreement at this stage is of paramount importance. I am in full agreement with the leader of the opposition. But also I do recognize the difficulties that have been facing Britain and the United States in arriving at agreements for technical reasons, for reasons of the background behind all of their weapons. Now a fresh approach should be made, and on that account I addressed myself a communication to the minister of defence of Britain and the secretary of defence of the United States, asking them to try again to arrive at some means to an agreement. They, with the members of the other North Atlantic treaty nations, should now ask General Eisenhower himself to call into consultation at any level the required personnel to arrive at an agreement on something so that we shall stand together on this
4108	HOUSE OF
Supply-Defence Production fundamental weapon and show that we can agree on making progress through co-operation together.


[Stage Direction]
Item agreed to.
At six o'clock the committee took recess.
[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
77. To provide capital assistance for the construction. acquisition, extension or improvement of capital equipment or works by private contractors engaged in defence contracts, or by crown plants operated on a management-fee basis, or by crown companies under direction of the Minister of Defence Production, subject to approval of treasury board, $50,000,000.
Howard Charles Green: This item provides for capital assistance to three groups of corporations. First of all there are the private contractors engaged in defence contracts, then the crown plants operated on a management-fee basis and, thirdly, crown companies under the direction of the Minister of Defence Production. What companies or crown plants will benefit from this vote?


Clarence Decatur Howe: It is practically all Canadian Arsenals.


Howard Charles Green: I would like the minister to include the three classes, namely the private contractors, the crown plants and the crown companies.


Clarence Decatur Howe: These are capital assistance projects:
Aviation Electric Limited'; machinery for instruments, $119,055.
Canadair Limited; equipment for F-86 aircraft, $6,688,726.
Improved airport facilities, $95,304.
Light Alloys Limited; magnesium castings; building, $1,320,000; equipment, $932,960; housing, $200,000.
A. V. Roe; Orenda engines and air frames for CF-100, $9,350,000; equipment, $36,500.
Those are some of the principal capital expenditures which have been approved to date. There are others in the offing. A long list of items is under consideration. Does my hon. friend want to have the whole list?


Howard Charles Green: Would there be any objection to putting it on Hansard?


Clarence Decatur Howe: I think there would be, because a good many of these negotiations have not been finalized.


Howard Charles Green: The companies' the minister has listed are all private companies, are they?


Clarence Decatur Howe: Yes.
[Mr. Claxton.l


Howard Charles Green: No crown companies included in that list?


Clarence Decatur Howe: That is right. The crown companies are:
Canadian Arsenals Limited; rehabilitation of hexachlorethane plant at Brownsburg, $150,000; rehabilitation of explosives plant, Valleyfield, $5,500,000; electronics division; $800,000 at St. Paul l'Ermite; $3,500,000 at Scarborough. Guns and ammunition division, $6,200,000. That is the list, I believe.


Howard Charles Green: Are they in the category of crown plants operated on a management-fee basis?


Clarence Decatur Howe: No. My hon. friend will understand that all the facilities created by capital assistance are the property of the crown. To that extent they are operated not on a management-fee basis but under the management of the plant in which the equipment is installed.
We have only one management-fee contract, and that is the Valleyfield explosives plant which is being operated by Defence Industries Limited on a management-fee basis. That is the former arsenal. It was not used for several years and had fallen into a state of disrepair. It is being put back into condition and operated by Defence Industries Limited.


Howard Charles Green: Would Emerald mine come under that category, also?


Clarence Decatur Howe: Yes, Emerald mine is being operated under a management-fee contract for the account of the crown. It is a cost-plus-10-per-cent contract.


Howard Charles Green: What company operates that mine?


Clarence Decatur Howe: I do not remember the name offhand, but it is the company of which Mr. Charles A. Banks of Victoria is president.


Howard Charles Green: The company which owns the rest of the property?
Mr.' Howe: Yes.


Howard Charles Green: Yesterday a bill was introduced providing for an extension of the Canadian National Railways from Sherridon to Lynn lake, Manitoba. The explanation was given that the Department of Defence Production was providing $4,725,000 for that line. Would that amount come under this vote, or does it come out of the revolving fund of the department? If from neither of these sources, from what source does it come?


Clarence Decatur Howe: It is a capital assistance item, and the funds come from this vote. The situation there was that the government was

very anxious to bring in a nickel property at Lynn lake. The company who owned the discovery were able to finance the development of the mine and of the smelter to treat the ore, but they found it impossible to finance also any large part of the railway line. The estimated cost of the railway was about $14,800,000. It was decided, after a good deal of discussion, that the railway would provide $5 million, which they considered the amount which would be economical from the earnings point of view, and the company undertook to finance $5 million. The government undertook to finance the balance as capital assistance to the project.


Howard Charles Green: Apparently there is some provision for repayment by the company of at least part of the money advanced by the Canadian National Railways?


Clarence Decatur Howe: Yes.


Howard Charles Green: Is there a similar provision for money being advanced by the Department of Defence Production, or is that money to go into the line and, in effect, become part of the assets of the Canadian National Railways?


Clarence Decatur Howe: That is right. It is capital assistance to the project on an out-of-pocket basis. There is no recovery of that amount.


Joseph Henry Harris: The minister mentioned $3,500,000 for Scarborough. What is that?


Clarence Decatur Howe: That is a plant for the assembly of early warning radar sets. It is being constructed at Scarborough.


Joseph Henry Harris: In the township of Scarborough?


Clarence Decatur Howe: Yes. It is to be operated by Canadian Arsenals Limited.


Howard Charles Green: Do I understand that none of this $50 million will be recovered?


Clarence Decatur Howe: Oh yes; we own the properties we create, with the single exception of the railway to Lynn lake which will be owned by the Canadian National Railways. But in every other case the asset which is created by the $50 million is owned by the crown. I presume the procedure followed after the last war will be followed after this emergency, whereby the asset will be sold in the best market available.


Howard Charles Green: Are there any projects in contemplation similar to the extension of a railroad to Lynn lake. Mind you, I am not quarrelling with that extension.


Clarence Decatur Howe: No, that is an unusual project.


Howard Charles Green: There are no similar plans in mind?
Supply-Defence Production


Clarence Decatur Howe: No.


Stanley Howard Knowles: The minister has answered in part the question I am going to ask, namely as to what would happen to the assets which the crown would own in cases where extensions to private plants are built at government expense. The minister says that presumably they would be sold as they were after world war II. Can he give us any figures as to the total amount that was expended in that way during world war II and what we got back when those assets were sold after the end of the war?


Clarence Decatur Howe: I do not remember the investment figure but I recall that the recovery was over $600 million. I think we recovered about 65 per cent of the amount invested.


Stanley Howard Knowles: We are not now buying back any of those assets that we sold, are we?


Clarence Decatur Howe: The only case, I think, is the Emerald mine.


Mr. McLure:: Will the money being spent on these properties be for the manufacture of shells, cartridges, small arms, as well as the other items needed in defence production?


Clarence Decatur Howe: The hon. member will appreciate that at present the demand for shells is not great. The army is not fighting where Canadian shells are used. However, we are setting up capacity for shell manufacture, largely in government arsenals. The actual production of shells will not commence on a full scale until war actually breaks out.


Winfield Chester Scott McLure: The father of Canadian
munitions who was most successful in 1914 and the last war was Colonel Weatherby, whom the minister knows very well. I was hoping that when the government began to manufacture things of that kind he might be employed once more and consideration given to my province in that connection. There is no doubt about his success in getting out munitions.
I sincerely hope that the minister will consider my province in connection with defence contracts, and particularly Charlottetown where there are real mechanics, good labourers and fairly good machinery.


Clarence Decatur Howe: That has been attended to already. The great manufacturing firm in Charlottetown is Bruce Stewart and Company and they now have enough work modernizing frigates to keep them going for some time. I presume that after that there will be other work. I would point out also that there is an active air station on the island which is good for that particular locality.

Supply-Defence Production Mr. Brooks: Before asking what questions I have to ask I should like to request that the minister do as much as he can for New Brunswick. This afternoon the minister said that some $81 million had been spent in Quebec, $87 million in Ontario and a little over $2 million in New Brunswick in a certain period of time. That has been our proportion for some time. According to population that would work out to about $4 per head, while in the central provinces it would be from $25 to $30 per head.
I know that this is a difficult problem but I know also that the minister has been accustomed to dealing with difficult problems. I am satisfied that if he gives this problem his full attention he can work out a solution. The location of defence industries in our provinces-I am speaking more particularly for my own province-would be of great assistance. I know that hundreds of young men are leaving every week for central Canada. They have to close up their homes. Anyone reading the reports of houses built in the different provinces during the last few months will have noted that fewer houses were constructed in New Brunswick than in any other part of Canada.
The last time I was home three young veterans, men with families, came to my office to see if I could help them sell their homes. They said that they were moving to Toronto with their families. They all had nice homes but they were being forced to sell them at only a fraction of what they had paid. They told me that they were having great difficulty in finding houses to live in in Toronto. I should like to read what the Toronto Globe and Mail had to say about the housing situation in Toronto and how it affected those who were moving in from New Brunswick and other outlying areas. I quote: Men ought to be moving from places like New Brunswick, where they aren't needed to places like Toronto, where they are. But, with this region's critical housing shortage, they shouldn't be family men.
According to the Toronto Globe and Mail, young unmarried men should be leaving our province to come to Toronto to get work, but family men should stay at home and do the best they can. The situation is serious in New Brunswick and I do hope the minister is giving it every attention he can. Speaking this morning the minister said that repair facilities for aeroplanes were being established everywhere across Canada. May I have the minister's attention.?


Clarence Decatur Howe: I read that article some time
ago and. I do not think it has. much to do with this debate. We are not discussing housing.


Mr. Brooks:: That is the attitude the
minister always takes when this question of the distribution of industry is brought up. As a member coming from the maritime provinces I feel I should plead our case. We feel strongly about this situation and I feel sure that the minister can correct it if he will. I pay him that compliment. I said at 'the outset that he is accustomed to dealing with difficult problems, and this is a difficult problem. We in ithe maritime provinces have the same rights as people in any other part of Canada and it is up to the government of this country to see that the people in that part of Canada are treated in the same way as others. I do not intend to take any brush-off from the minister or anybody else in this connection. I would also like to have the minister listen to what I am saying.


Clarence Decatur Howe: When the hon. member speaks about housing conditions in Ontario I would remind him that I live right here in Ontario while he lives in New Brunswick.


Alfred Johnson Brooks: That is quite true, but you
are the minister for Canada in this connection.


Clarence Decatur Howe: I am fully aware of that.
Also, I was a mariti-mer before the hon. member was.


Alfred Johnson Brooks: You were also a United
States citizen before you were a Canadian, but that has nothing at all to do with this.
I should like to ask where repair facilities are being established across Canada, and whether any are being established in the maritime provinces? I should like to ask him where the $200 million is being spent for shipbuilding which the minister told us this morning was being spent in Canada. I should also like to ask him what assistance is being given to small industries in the province of New Brunswick and the other maritime provinces to assist them to become established. These are very important matters to us indeed, and I should like the minister to answer my questions and tell us what is being done in my own province so far as industries are concerned.


Mr. Lesage:: We are on item 77.


Alfred Johnson Brooks: I know where we are.


Clarence Decatur Howe: Do you know where you are?


Alfred Johnson Brooks: Yes, I know where I am.


Clarence Decatur Howe: To correot the figure of $2
million that the hon. member used, contracts placed in New Brunswick by the Department of Defence Production in the year 1951 total $7,281,043.


Alfred Johnson Brooks: I was quoting the figures the minister gave this morning when he said

that $81 million had been spent in Quebec, $87 million in Ontario, and a little over $2 million in New Brunswick in a certain period of time. It was not the figure for 1950. It was concerning another period.


Clarence Decatur Howe: My hon. friend asked what
we are doing in shipbuilding. Within the last week a contract has been placed for the repair and overhaul of five ships, two minesweepers and three frigates, with the Saint John Dry dock Company.


Alfred Johnson Brooks: That is repair, but what
about shipbuilding?


Clarence Decatur Howe: Certain ships are being built
there. I have not the figures before me. I think one of them is a lighter. I do not remember what the others are, but my hon. friend should have some idea what is going on in his own province. Then he would not have to cross-examine me on it. I have to think of ten provinces, not just one.


George Alexander Drew: Mr. Chairman-


Clarence Decatur Howe: Now we will have it.


George Alexander Drew: That is the kind of remark
that makes it difficult to deal with the minister in terms that produce the best results. It was an absolutely uncalled for affront to a member who is trying to get information from the man who is under an obligation to give it to this committee. It is not for the minister to tell any member that he should find out. It is for the minister to answer questions in committee.


Clarence Decatur Howe: Thank you very much for that instruction.


George Alexander Drew: You need instruction.


Clarence Decatur Howe: That is the result of your long
experience in this house.


George Alexander Drew: If the minister-


Louis-René Beaudoin: Order. The leader
of the opposition has contended that the remarks made by the Minister of Defence Production are tantamount to an affront to the hon. member for Royal. The words used by the minister were to this effect: The hon. member for Royal knows the situation in his province and therefore does not have to cross-examine me. Apparently the minister contended that the hon. member for Royal should know some of the facts himself. Alluding to that statement, the leader of the opposition said that it constituted an affront to the hon. member for Royal. Of course the words complained of should be complained of by the hon. member for Royal if they constitute a question of privilege. We are now dealing with an item and remarks must be relevant to the item.
Supply-Defence Production
Furthermore, I might add that in Beau-chesne, third edition, citation 418 says that the ordinary function of a committee such as this one is deliberation and not inquiry. It has been the practice for inquiries to be made in the discussions that have taken place in these committees. However, if it is to be a debate and not inquiry, strictly speaking the word "cross-examine" is one that could be properly used by the minister. I do not want the matter to go much further. I want members to make their remarks relevant to the item under discussion. The hon. member for Montmagny-L'lslet reminded the hon. member for Royal that we were on item 77, and if I understood the hon. member for Royal correctly it may be that he may have thought we were still on item 76, which was carried before the recess.


Alfred Johnson Brooks: Mr. Chairman, I am merely
seeking information from the minister. So far as the other item is concerned, I was attending the veterans affairs committee this afternoon, and I was not aware that the item had been carried. It is information that I should like to have. The minister says that I should know the situation in the province of New Brunswick. Let me tell him that I know it too well, and the situation in New Brunswick is exactly what I am complaining about. I am complaining because we have not the industries that we should have. I am complaining because thousands of our young people have to go to Ontario or Quebec for employment. These are things that I do know, and what I am asking the minister to do is to see if he cannot distribute industry in some way so that we can hold our people in our province. That is the situation so far as I am concerned.


Clarence Decatur Howe: I can tell my hon. friend to
start with that the nature of the answer he gets from me is very liable to follow the pattern he sets in asking the question, and that applies to what has just happened. If he will be a gentleman in asking his questions I will try to be a gentleman in giving the replies.


George Alexander Drew: Mr. Chairman-


Alfred Johnson Brooks: I rise on a point of order.


Clarence Decatur Howe: I am on my feet.


George Alexander Drew: All right, you are on your feet. I ask, Mr. Chairman, that you demand the withdrawal of a statement which is absolutely inexcusable.
The Depuiy Chairman: Order.


Alfred Johnson Brooks: The minister has accused me of being ungentlemanly in asking my question. I think that is unparliamentary and

Supply-Defence Production unfair, and X would ask you, Mr. Chairman, to request the minister to withdraw that statement. I prefaced my remarks tonight by paying the minister a compliment, and it was only when he refused to answer my questions that I perhaps used a little more heat than I otherwise would have. I think it is unfair and ungentlemanly for him to make that statement, and I ask him to withdraw it.


Clarence Decatur Howe: I accept the apology and I withdraw anything I said that was offensive. I can now give my hon. friend the information he wishes. It is to be found in Hansard of June 4 in the statement made by the hon. member for Vancouver Centre in his capacity as parliamentary assistant to the Minister of National Defence. The announcement made at that time was that a steel crane lighter will be built by the Saint John Dry dock Company, and that the Saint John Drydock Company will also build two Norton class tugs. That is in addition to the alteration work that I mentioned.


Alfred Johnson Brooks: I also asked the minister about repair facilities for aeroplanes. He said that they were being established across Canada, and I wanted to know if there were any in the maritimes and where they were.


Mr. Cote (Malapedia-Malane):: Don't you know? I thought you came from there.


Alfred Johnson Brooks: I hope I know as much as you do.


Clarence Decatur Howe: I cannot say. I know that one contract has been placed with the Fairey Aircraft Company of Halifax and also with the Cossor Company of Halifax. I do not recall where facilities are set up in New Brunswick, but I will be glad to make inquiries and give my hon. friend the information at the first opportunity.


Alfred Johnson Brooks: I understood the minister to say that there was a representative for the maritime provinces in the office at Ottawa.


Clarence Decatur Howe: Yes, there will be.


Alfred Johnson Brooks: Can he tell me who that representative is?


Clarence Decatur Howe: The appointment has not been made. It will be made within the next week. Two names are under consideration, and I cannot tell my hon. friend which will be chosen.


Mr. Gillis:: At the risk of getting into difficulties I am going to say a few words on this item. I too was out of the house this afternoon attending the veterans affairs committee; otherwise I would have made a general statement. I am not going to do that at this time; I will stick to item 77.


This item is for defence production, which covers a very broad field. I want to refer briefly to the statement by the minister thig afternoon that in the allocation of contracts for the expenditure of money for the purposes of this vote the great potential for the manufacture of munitions was in Ontario and Quebec. If that is the thinking of the department, that is the way the money will be spent under this item. I disagree with that statement. While the minister indicated this afternoon that he has done some pretty broad and comprehensive planning in the mechanics he has set up in his department, that particular statement is not correct in the light of the defence program. The great potential for munition making under present circumstances, and as we see a potential war developing, is not in the centre of Canada. In my opinion the major portion of the armed force we are building today is designed for western Europe. The whole program of arming our north Atlantic pact countries means that the munitions and equipment necessary for that purpose will have to be shipped to Europe, so the logical place to do the manufacturing is the point closest to Europe. Even though you now have an overdeveloped fabricating organization in the two central provinces, the great bulk of the raw materials are being dragged here from the east coast. That seems pretty illogical, and it tends to great waste if you haul your raw materials all the way up here, manufacture them and then haul them all the way back to the east coast again and ship them overseas from Halifax or Sydney. If the minister is realistic, as I know he is-though he may have some bad advisers who have centralized minds-he will agree with me.
Then I am convinced that this is not a short range program. This program is going to last for a long time. I believe in connection with munitions and vehicles, if you like, the minister should think in terms of allocating a large plant as near basic steel as he can get it, and in an area where labour is available. The hon. member for Royal has indicated, and he is quite right, that the greatest export from the maritimes is our young people. We have all the ingredients necessary for an economic program in connection with munitions, vehicles and things of that kind, which will have to be shipped out of the country; and they should be produced as close to the sources of raw material and labour as you can get. If this were a war we would be getting over in three or four years and we had an emergency program it would be all right to throw up your plants anywhere, as was done during the last war; but that is not the case. In my opinion this is a long range, more or less permanent

program; and if the money of the taxpayers is to be fairly allocated in view of economic conditions the minister should give serious thought to the establishment of a plant or two in the area where both raw materials and shipping facilities are available.
I would like the minister to think of that, because as I see our program developing today the thinking is exactly the same as it was during the last war, when we overdeveloped industry in the central provinces, particularly in Ontario, to such an extent that a power shortage was created. That power shortage still exists, so that Ontario now is racing around the country asking for a billion dollar expenditure in the St. Lawrence so they can get more power to meet a potential industrial development in this province that is not warranted. I am leaving that thought with the minister, because certainly this is not an equitable development. I believe it is uneconomic and shortsighted, and it is not like the minister to carry on a program of that kind. I wish he would take that question under advisement. I do not believe it is good thinking to centralize everything in these two provinces, with the chance of an atomic bomb wiping out everything overnight. It is still early; this program is just getting started; it is still in the embryo stage. So I hope the minister and his advisers will sit down and seriously consider utilizing, in the part of the country where they are located, the raw materials that are being dragged across this country for fabrication.
Most of the stuff we are going to manufacture will be sent to Europe, as I have said. Having that in mind, the closest you can get to raw materials, shipping facilities and a labour supply is down on the east coast, so I leave that thought with the minister. If I had been here when the first item was called I might have developed a real argument, but I am rather restricted now. I suggest that the minister think over my observations and let us know what can be done.


Clarence Decatur Howe: I have given a good deal of thought to that situation. Last year we placed contracts in the maritimes to the extent of $28,596,000. That was direct defence purchasing by the department for which I am responsible, but there are defence supporting industries which are also very important. For instance, we regard the building of freight cars as an important defence supporting industry, and about 25 per cent of that work is carried out in the maritime provinces. The hon. member will also keep in mind that the production of coal is an important defence supporting industry. I have
Supply-Defence Production been very pleased at the progress made in locating industries in the maritime provinces during the past two or three years, and have tried to assist that development wherever possible. As my hon. friend knows, we have advanced a substantial sum for the mechanization of coal mines in an attempt to increase production there. We also allotted certain capital assistance to the Trenton steel works, and put in a very large press for pressing rotors for the new escort vessel program, at a cost of about two and a half million, dollars. If at any time there should be an opportunity to place an industry in the maritime provinces my hon. friends both from Royal and from Cape Breton South may be sure that we will give every assistance possible.


[Stage Direction]
Item agreed to.
78.	To provide for research and development of jet engines and aircraft, $1,000,000.
Howard Charles Green: Would the minister explain this vote for research? I am wondering why it does not come under the defence department, where they have a research branch, or under the national research council. What is the reason that it is shown in a vote of the defence production department?


Clarence Decatur Howe: This was a civilian project
undertaken some three years ago to assist the A. V. Roe Company Limited in developing a commercial jet transport. The transport was developed and is, I believe, a very creditable plane. Unfortunately, in times like these with the urgent need for war planes it has been decided to put that work aside. This million dollars is to settle accounts up to the time the work is put aside. If the opportunity offers a little later we hope to complete the work, and produce a Canadian-designed air transport plane powered by Canadian jet engines.


Howard Charles Green: It has not been carried along to the finished stage yet?


Clarence Decatur Howe: No, it is being dropped. The plane was finished and Sown, as my hon. friend is probably aware. Certain improvements were suggested by the flights, and a second prototype was under way. When the need for factory space for war production became evident we decided to put the transport project aside.


Gordon Graydon: May I say a few words with respect to that. I believe the work which has been done by the A. V. Roe Company at Malton deserves a word, because in a sense they are the pioneers in the jet passenger plane field. The jet liner, which is a matter of great pride to the workmen and management at Malton, to the minister and to all of

Supply-Defence Production us, has put Canada rather out in the lead so tar as that type of machine is concerned. It is a beautiful machine. I should think there is nothing that looks quite as graceful in the air as the new jet liner. I would fancy that as time goes on perhaps the work that has been done will provide great benefits and advantages so far as Canadian leadership in the field of civil aviation is concerned, when the opportunity finally comes for it to blossom forth. I am glad to hear that the minister has at least settled up the accounts in connection with the Orenda research, because I think a magnificent job has been done -at Malton, and I am sure the minister will agree with that.


Clarence Decatur Howe: I agree thoroughly. I am sorry that the work must be suspended, but we only have so much floor space and it is needed for war production.


[Stage Direction]
Item agreed to.
79.	To provide for the liquidation of contracts, including commitments of previous years related to the acquisition of assets operated by the departments of munitions and supply and reconstruction and supply or an agency of these departments; the liquidation of the assets and liabilities of closed crown companies and crown plants; and for miscellaneous and unforeseen expenses, $200,000.
Howard Charles Green: Is- -this a -clean-up item to
finish off various old contracts, or just what is the explanation of this $200,000?


Clarence Decatur Howe: There are certain long-standing lawsuits against the department for patent rights and so on. I cannot say this is a clean-up item. We began with a clean-up item of $500,000, and we have gradually reduced it to $200,000. We have claims at the moment for $3,064,000, -and we estimate that of this amount there is payable this year $144,000 plus legal costs.


[Stage Direction]
Item agreed to.
80.	To authorize the transfer of funds from the Canadian Commercial Corporation employees' retirement fund to the retirement fund created by the Civil Service Superannuation and Retirement Act, in respect of past contributions and accumulated interest thereon of employees transferred from the corporation to the department, $1.
Mrs. Fairclough:: Will the minister tell us
if there are many employees affected by this item? Approximately what is the number of employees and the amount involved in this transfer?


Clarence Decatur Howe: The employees of the Canadian Commercial Corporation have only recently been taken into -the civil service superannuation and retirement act. Prior to that time, however, five per cent was deducted from their salaries under a government retirement plan that was oarried on with temporary employees during the last war.


That five per cent is now transferred to the retirement fund as a credit to -back retirement for the employees that have now been taken in.


Ellen Louks Fairclough: Does this mean that
these employees -are now governed by the civil service commission?


Clarence Decatur Howe: That is right. I should say
they are n-ot all transferred. There are still some employees with Canadian Commercial Corporation but the major part of the staff have been blanketed into the civil service.


Ellen Louks Fairclough: This just covers those
who have -been transferred?


Clarence Decatur Howe: That is correct.


[Stage Direction]
Item agreed to.
Crown companies-
81.	To provide for expenses incurred by Defence Construction Limited, in procuring the construction of defence projects on behalf of the Department of National Defence, $3,000,000.
Wilbert Ross Thatcher: Will the minister state
whether any of these defence projects are on the prairies?


Clarence Decatur Howe: Yes, a good many of them are on the prairies.


Wilbert Ross Thatcher: Would the minister indicate which ones are?


Clarence Decatur Howe: This is to provide for the cost of operating the company for the services of the Department of National Defence. In other words, it is really an operating fee.


Mr. Murphy:: I believe I am in order, Mr. Chairman, in raising this subject under this item, but I want to meet the wishes of the minister. I wish to speak about the Polymer explosion, but perhaps the minister would rather answer under another item?


Clarence Decatur Howe: There is no vote here for the Polymer Corporation. I do not want to stop my hon. friend, but I am sorry he did not bring it up on the general item. Personally, I have no objection to his speaking on this item.


Louis-René Beaudoin: There may be a supplementary item later on which the member could speak.


Joseph Warner Murphy: I shall not be very long.


Louis-René Beaudoin: Has the hon. member unanimous consent to speak on the Polymer Corporation under this item?


Some hon. Members:: Agreed.


Joseph Warner Murphy: I want to be quite fair in this, Mr. Chairman, and I know the minister will appreciate that. I am just hoping that after I am through the minister will promptly

make a statement to the house, and to the country, respecting this important industry at Sarnia where this blast occurred. It was perhaps a miracle in many ways that it did not do more damage. I have some questions to ask the minister concerning this particular explosion. I believe the public is rather unfortunately informed about what took place, because I am inclined to believe that some of the statements that were carried in the press and over the radio were exaggerated. Perhaps this was due to the fact that statements were not immediately forthcoming from either the minister or the top management at Sarnia.
Living on the border as I do, I know that our people listen to the United States radio stations. One of them thought that this was an atomic explosion. I believe the people in Sarnia are most fortunate that it was not worse than it was. It was disastrous enough. I noticed a statement made by the minister that the damage was from $50,000 to $100,000. He may revise that statement. I think it was made immediately after the explosion. What concerns me and the people in my area, which is a chemical valley, is an article which appeared in the magazine published by the Polymer employees. The minister in his statement after the explosion did say that there had been two previous explosions. I want the members of the committee to appre-[DOT] ciate the fact that the minister did state at that time that this particular element, butadiene, is not one of the easiest elements to handle. What disturbs so many people, apparently, is the fact that there were not two but three previous explosions, I believe, in that particular area.
Hon. members may not realize it but this tank was made of steel seven-eighths of an inch thick. Of course all the plate glass windows in the neighbourhood were blown out, and fragments of steel pipe were found a mile or a mile and a half from the scene of the explosion. I am also informed-and I think this will impress upon the committee just how serious the explosion was-that one fitting or valve weighing 26J pounds was found a little more than a mile and a half away from the explosion. I should now like to pay a tribute to those in Polymer and to the fire department who played such an heroic part in averting What could have been much more serious.
I am now going to quote an article which appeared in the official staff publication of the Polymer Corporation. The quotation I hold in my hand was taken from tlje Canadian Observer, which in turn took it from an article which appeared in the company publication. It is dated Monday, May 7, 1951. It
Supply-Defence Production refers to an explosion in March of this year, or an averted one. It says:
A potentially serious fire at Polymer corporation's butadiene extraction unit was averted on March 29, through the bravery of an operating crew, according to a graphic story appearing in the latest edition of the "Polysphere," official staff publication of the crown company.
Then it goes on to speak about the heroes and says:
With absolute disregard for their personal safety, these men prevented what could have been a serious fire March 29 by shutting off escaping butadiene which was being released to the atmosphere through a ruptured butadiene product line.
The article continues:
At approximately 4.25 p.m. on March 29, a 6-inch steel line connecting three butadiene accumulators ruptured, releasing approximately 9,000 pounds of butadiene to the atmosphere. The line ruptured with considerable report, bringing the operating crew to the scene immediately.
Because of the dense hydrocarbon fog which enveloped the area, it was impossible to determine where the leak was coming from.
Then it goes on to speak about how three of the employees shut off the plug valves, and how McEachran, Moore and Roberts entered the dense hydrocarbon fog and tried to shut off one 6-inch plug valve, but found that they could not.
That to me is disturbing, and it is also disturbing to the people in my area. It may be that an inquiry has been held to determine why that valve could not be shut off at that time. These are elements so peculiar in their nature that we can think of explosive qualities in many of the products coming from a chemical valley.
The article continues:
They shut off the plug valve at a header which shut off the violently roaring hydrocarbon, thus stopping the leak and giving them a chance to see the source of the leak.
The last paragraph reads:
Cause for the line rupturings was attributed to a formation of "popcorn" which develops when pure butadiene remains dormant in a line for long periods of time. It is a risk common to industries where butadiene is used1.
In one of his previous statements the minister emphasized that. I have practically every article that appeared in the press at London, Windsor, Sarnia, Toronto and so on. I am not going to deal with them in detail. I think the committee is already impressed with what happened and with what was averted. If I were speaking on civil defence I would go into it in greater detail, and I will at a later time; for what happened that night was almost a calamity because of the thousands of cars which gathered in a very few minutes.
I am going to bring my remarks to a close with some questions which I should
4116	HOUSE OF
Supply-Defence Production like to have the minister answer, perhaps not tonight, but at any time that he feels so disposed. The people are entitled to it. I was hoping that an inquiry would have been held into this explosion immediately and the public properly informed of what actually happened. I was there for two days after the explosion. I did not want to bring it up at that time because I thought that I would give it more thought, and I did not want to create any commotion. Under these conditions perhaps we have to accept the unusual and take it in our stride.
There is another reference here by a former employee who dealt with an explosion earlier, and maybe at some later date I will go into it. There is some question about the statement of this particular employee who attended at a previous explosion. What alarms us down there is this. This plant is adjacent to the Imperial Oil Company refinery, which is the largest refinery in the British empire, and which is now increasing its production by about 25 per cent. Just on the other side of Polymer is the Dow chemical plant, another chemical industry. They all play an important part in our war potential.
Apparently the so-called "popcorn" is something that accumulates in a line. The minister can correct me if I am wrong, but I understand there were four explosions within eleven months, or three averted explosions. I should like to know what this so-called "popcorn" element is, and how it forms in this particular line. How rapidly does it build up? If it does build up, why is it not removed periodically? Can it form a plug in the line? It apparently did because there was notice to the people in that area that something serious was happening. A flare showed ten times as bright for two or three moments, and then shut off. Apparently the escape valve did not work. Could it form a plug in the line? Was the line failure caused by excessive pressure? Was the six-inch line of adequate strength to withstand anticipated pressure? Was the line seamless or welded? Could the line have been weakened by corrosion or other causes? If the line plugged up could the butadiene build up enough pressure to rupture the line? Are there safety valves which shut off the flow of butadiene when the pressure increases above normal operating pressure? Are those safety valves tested periodically to determine if they operate satisfactorily? There is evidence to which I have already referred that they do not operate.


Have there been other cases where similar failures have occurred in installations handling butadiene? If not, how have they been prevented?
The crew was unable to close the six-inch plugged valve. Was the plugged valve damaged by a line rupture or was it out of order because of failure to lubricate it, or for some other reason? Would a gate valve have been easier to close?
I am referring to the explosion on Sunday, May 6, 1951. I am asking if there was an investigation after the line rupture on March 29. Were any steps taken to instal safety devices and prevent further failure? Were the 30,000-gallon tanks and connecting lines of adequate strength for the anticipated pressure? Was this tank normally used for butadiene storage? Could popcorn have formed and plugged some of the equipment or the pressure release line? How did the butadiene ignite?
Those are the questions, Mr. Chairman. I doubt if the minister will be able to answer them immediately. However, I think that it may be that inquiries by those competent to make them could find some reason for this occurrence. It might have been a spark or flame in the area. Theories have been advanced. For instance, did butadiene in the line and tanks have oxygen mixed with it to form an inflammable mixture? What amount ' of oxygen or air is required to form an explosive mixture with butadiene?
I intended to be brief, and I hope I have been fair. I believe I would not do justice to the constituency I represent if, in the light of what took place, I failed to ask the minister for an explanation. I know some of these questions are technical, and if he is not prepared to answer them tonight it will be satisfactory if they are answered at a later date.
I should like hon. members to appreciate that those of us in that area were greatly concerned, and we were much relieved that the explosion did not do more damage. I am hopeful that we will not have three or four explosions in a year, and I am sure that with the able direction available in the Polymer Corporation management that will not take place.
I know they are working with a dangerous element. Hon. members will appreciate that in the chemical industry there is a constant fight with treacherous elements. I trust the minister will take my remarks in the spirit in which they are offered, and make some explanation to the committee.


Clarence Decatur Howe: Obviously I am not qualified to answer the questions asked by the hon. member. However, I shall be very glad to send them to Sarnia and obtain expert answers to them so that I may give them to my hon. friend at an early opportunity.
I never attempted to minimize the seriousness of the explosion which took place recently. But I think it is a remarkable tribute to the safety precautions taken at the plant that an explosion of that magnitude could happen without loss of a life, and with only very limited damage to property. I am told the damage has now all been repaired and that section of the plant is operating again at full capacity.
The plant was built by experienced chemical engineers, and it was designed in units to minimize damage from explosion. Every safety device known to man has been installed there-at least so I am informed. If as a result of this experience other safety devices are indicated, they will be installed. But I do hope that, with the experience gained from a misfortune of this kind, there may be no further difficulty.


Mr. Hosking:: Mr. Chairman, I would suggest to the Minister of Defence Production that if he requires the building of any more plants, such as Polymer, we could supply him with suitable land which would not be in a densely populated area. I can assure him that we would be pleased to have them installed in the constituency of Wellington South.


Louis-René Beaudoin: I would remind the committee that we are discussing item 81, which is to provide for expenses incurred by Defence Construction Limited in procuring the construction of defence projects on behalf of the Department of National Defence. By unanimous consent the hon. member for Lambton West did make a brief statement concerning the explosion at the Polymer plant at Sarnia. I suggest now, however, since the minister has replied, that we return to a discussion of item 81.


Mr. Black (Cumberland):: Mr. Chairman, up to this time I have not taken part in this discussion, but certainly not because this subject lacks interest in Nova Scotia. I have taken it for granted, from statements made at different times to me privately and otherwise by the minister, that it is his expectation and his purpose to give a fair share of industry to Nova Scotia and the other maritime provinces. A great many people there are keenly interested. I have strong views in the matter, and have expressed them many times in the house. I have directed attention
Supply-Defence Production to the unfairness to our province during the last war, and up to the present, and I shall not elaborate on it in detail tonight.
I can say that any war industry established there in the past gave good results, and any that will be established under the defence production appropriation we are now considering will also succeed.
On May 23, I asked the minister what progress was being made in the establishment of a chemical industry in Nova Scotia, based upon the presence of sodium chloride and other chemicals. He replied:
Consideration is being given to the problem. However, the project has not advanced to the point where any announcement can be made at the present time. Serious consideration is being given to it.
Unless the minister is prepared to answer at this time, I shall not press for a further statement. I would point out again that there are salt deposits in the Malagash area which have been in operation for many years. There is a tremendous tonnage there of natural salt, as well as other chemicals. There is a large salt producing industry only a few miles from my home town of Amherst. Borings have indicated a thickness of thousands of feet.
There was also a large aeroplane industry which operated with great success in Amherst during the last war. We have been expecting an announcement of further developments under the estimates we are now considering. The minister has given us encouragement as to what may be done there shortly. If he is not prepared to make a statement about it now, I shall not press him.
A wooden ship building industry was established 150 years at Port Greville on the bay of Fundy and these is little employment there now, but they have been expecting some special work. Can the minister make any announcement in that regard? I have been informed that a special representative, I presume from his department, has been visiting the wooden ship building yards in Nova Scotia.
There is a great deal more I could say, but the minister knows my views and he knows also what can and should be done in the maritime provinces. I am taking it for granted that his department is going to extend industrial activities down there and give us a share of these large expenditures and improve employment and business conditions in our part of Canada. I shall be glad to hear any announcement in respect to these or other matters the minister has to make,

Supply-Defence Production out I will not now press the minister any further. I will wait until he is able to state, either publicly or privately, or both, just what he is prepared to do for us in the maritimes.


Clarence Decatur Howe: I am sorry I cannot be too specific at the moment. There is great interest in our aircraft division in connection with subcontracting work at Amherst. Studies are still going ahead in the chemical field, but it takes a good deal of time to go through all the highways and byways involved in that industry. I can assure my hon. friend that the next time we are considering these estimates we shall have something worth-while to tell him.


Mr. Fulton:: I should like to ask some questions about Defence Construction Limited. What is the relationship between Defence Construction Limited and Central Mortgage and Housing Corporation? Who actually administers Defence Construction Limited?


Clarence Decatur Howe: Defence Construction Limited is a corporation under the Department of Defence Production. Its president is R. G. Johnson, a very experienced man who was head of construction in the department of munitions and supply during the last war. He was with the department throughout the war, but was in charge of the branch during the last year.
The staff of Central Mortgage and Housing Corporation is retained by Defence Construction Limited to carry out certain duties. In other words, instead of setting up branches across Canada from a standing start we thought that it was better business to retain the staff of Central Mortgage and Housing Corporation, and have them provide additional staff when it was required. For that service we pay them a fee, which is represented in this item, of three per cent of the value of the work carried out within the period. That is supposed to represent the cost. If the fee proves to be too large it is adjusted, or a supplementary payment is made if it is found to be too small, but current balances are settled on the basis of three per cent.


Edmund Davie Fulton: Central Mortgage and Housing Corporation is the agent of Defence Construction Limited rather than Defence Construction Limited being the agent of Central Mortgage and Housing Corporation. Can the minister tell us how many projects are under way under Defence Construction Limited for which this item is being provided?


Clarence Decatur Howe: I have not the number of projects, but the total value is $65,247,933.01.


Edmund Davie Fulton: Is there an item elsewhere to provide for the payment of those projects because this item is only $3 million?


Clarence Decatur Howe: The projects are being carried out for the Department of National Defence and the money will come from the appropriations of that department.


Edmund Davie Fulton: I think I see the picture now. This is purely to cover administrative costs?


Clarence Decatur Howe: That is correct.


Edmund Davie Fulton: Has the minister information as to where the projects presently under way are located?


Clarence Decatur Howe: They are located I should think pretty well in every city in Canada. It would be a long list and I am sorry it is not available at the moment.


Edmund Davie Fulton: Without going into particulars of that sort can the minister state the general nature of the projects? Is it housing or is it other types of construction?


Clarence Decatur Howe: Housing is handled by Central Mortgage and Housing Corporation for the Department of National Defence just as any other housing is handled, except that the bills are paid by the Department of National Defence. Housing is not included in this vote, but it covers almost every other kind of construction, such as fortifications, airport structures and the various types of buildings that the armed forces require.


Edmund Davie Fulton: I was not thinking so much of housing in cities to accommodate workers in defence industry; I was thinking more of projects like radar stations. Is it not correct that in looking after the project Defence Construction Limited would provide housing accommodation?


Clarence Decatur Howe: That is correct, isolated housing.


Edmund Davie Fulton: The minister gave me the total cost of the projects presently under way. Has he got that broken down by projects?


Clarence Decatur Howe: No. The figure of $65 million which I gave was for 1951, beginning January 1, but the projects taken over from Canadian Commercial Corporation as of December 31, 1950, totalled $51,100,000. They are in addition to the $65 million which have been placed subsequently, giving a total of $116 million.


Edmund Davie Fulton: Is there a project being constructed by Defence Construction Limited at Falconbridge?


Clarence Decatur Howe: A radar station is being built in that area.


Edmund Davie Fulton: I should like to have information with respect to one other project which I

understand is being constructed at Edgar near Orillia. Does the minister have particulars of those two projects there so that he can tell us how much the expenditure has been to date and what has been acquired for that expenditure?


Clarence Decatur Howe: I am afraid I am not in a position to do that. As my hon. friend knows, these are very secret projects. The security around them is very strict. I have not had a report on them recently. They were started some two months ago, and I do not imagine there has been very much building other than a road into the property at the moment. They are both rather inaccessible sites. I could get the information my hon. friend wants, but I would have to ask for it particularly.


Edmund Davie Fulton: I do not want to hold up the item by suggesting that the information be produced first. However, the information I have is that for the amount of money expended already there is very little to show. As the minister says, there is not much more than a road into the project and some of the buildings in which the construction workers are residing for an expenditure of between $2 million and $3 million. That is the information I have. I am merely putting that forward. As I say, I do not want to hold up this estimate until the particulars are received and made available. Perhaps I can follow it up by correspondence, but on the basis of the information I have I would urge the minister to give these projects his personal attention and see how the money is being spent and whether value is being received for the money as it is spent. I should also like to ask whether Defence Construction Limited has appointed a firm of consulting engineers for all projects that they undertake or, if not, for all projects dealing with these radar installations?


Clarence Decatur Howe: As I remember it, the firm of Margison and Babcock made one design for all radar stations. I think I am correct in saying that they made a master design and it was adapted by the staff of Central Housing and Mortgage Corporation to the local conditions. As I remember it, that is the situation. I might explain that there may be off-site work being done on the radar stations. For instance, there may be structural steel made off the site. I would be surprised if the total spent so far has reached anything like $2 million for these two stations because the cost of each runs around $4 million. The estimate for each is about $4 million including the equipment, and the contracts have not been placed for more than two or three weeks.
Supply-Defence Production


Edmund Davie Fulton: Can the minister tell us something about the firm of Margison and Babcock? What qualifications do they have for this type of work?


Clarence Decatur Howe: It is one of the oldest consulting engineering firms in the Toronto area. Mr. Margison has been a consulting engineer in that area for at least thirty years, and perhaps longer. I think he is perhaps the outstanding consulting engineer in Toronto.


Edmund Davie Fulton: When the minister says "consulting engineer", is that in architecture, or what?


Clarence Decatur Howe: No, engineering.


Edmund Davie Fulton: Professional engineering. Is that the main type of work on which this firm has been employed as consultants? I understand that a good deal of the work in connection with these stations is purely building, not so much engineering as simply the central building and the housing accommodation necessary to house the men. In what capacity is the firm of Margison and Babcock employed?


Clarence Decatur Howe: They are employed as general engineers. We had a problem there. We needed an engineering design and we retained Margison and Babcock to provide that design. There is nothing very mysterious. Is my hon. friend suggesting that a consulting engineer is not capable of building houses in a remote area if it is necessary to do so?


Edmund Davie Fulton: I am not suggesting anything at the moment. I am trying to get some information. When these projects are to be built, are the contracts let by Defence Construction Limited for the construction of each individual project?


Clarence Decatur Howe: Yes, contracts are let by Defence Construction Limited. It is impossible to submit the plans for tender for the reason that they are very secret. They are kept under lock and key at all times, and it is quite ridiculous to think that they could be put out for tender. That would be like telling the world what a radar station looks like. The method of allocating tenders was that responsible contractors were chosen for their ability to carry out the job, and also chosen with an eye on the other work they do for the department. We chose contractors who we knew were capable and who had the available manpower and equipment to do the job.


Edmund Davie Fulton: Are the contracts allocated on a cost-plus basis or a firm bid basis?
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Supply-Defence Production


Clarence Decatur Howe: Cost-plus.


Edmund Davie Fulton: Can the minister tell us the names of the contractors to whom the contracts have been allocated?


Clarence Decatur Howe: I have not the list in full. I could name some of them. I met them all in my office after the contracts were awarded and gave them a talk on the secret nature of the work they are carrying out, the necessity for speed and the importance of the project. I could name a good many of them. If my hon. friend is interested in a particular locality I can probably remember who the contractors were in that locality.


Edmund Davie Fulton: I can perhaps follow this up
by questions on the orders of the day. Is the minister in a position to give us an estimate of the average total cost of one of these projects? I do not suppose that the cost is the same for each one. That is why I am asking if he can give the average.


Clarence Decatur Howe: I am not in a position to give
that at the moment. I think perhaps my hon. friend should not pursue this matter further. He is treading in the realm of security, and it is rather difficult for me. I should like to answer his questions as frankly as I can, but I do not wish to get in trouble with the security officers.


Edmund Davie Fulton: I just have this to say. I
have some information as to the cost on the basis of which I have asked the minister to look into two particular projects which I have named. I did not realize at the outset that they were all radar. It was not until the last few questions and answers that that emerged. On that basis I quite appreciate the minister's position, and for the time being I will not pursue the subject any further.


Mr. Hodgson:: We have a dominion arsenal in my town of Lindsay, and I do not think it is running to full capacity at the present time. There is available space. There are also water mains and electricity available for enlargement of the plant. Has the minister had that drawn to his attention? We have a lot of good workmen who are anxious to get some work along that line. If the minister can increase the size of the plant or increase the work it will be much appreciated.
Mr.' Howe:	I shall be very glad to keep
that in mind. I think there is work coming into the plant in considerable volume. I do not know whether or not it will be necessary to expand the plant.


Mr. Pearkes:: Are we on item 82?


Louis-René Beaudoin: We are now on
item 81.


Gordon Francis Higgins: Can the minister tell me if
any contracts have been awarded in Newfoundland under this item? I have not asked a question today. It may have been answered before.


Clarence Decatur Howe: Frankly I do not know whether Defence Construction Limited has work in Newfoundland. I presume it has. If I told you it had you would ask me where it was, and I would not know that; so we had better call it off.


[Stage Direction]
Item agreed to.
Canadian Arsenals Limited-
82. Administration and operation, $3,300,000.
George Randolph Pearkes: I wonder if the minister
would outline for us the role of Canadian Arsenals Limited, and explain what arsenals are being operated in Canada by that corporation. A few weeks ago the minister announced that one of the arsenals near Montreal, I believe, had been leased to or was being operated by a private company making a certain type of gun. I would be very interested1 to know the general policy of Canadian Arsenals Limited and what other arsenals we have in addition to those at Quebec and Lindsay. The minister might also say whether they are being operated by Canadian Arsenals Limited solely or in conjunction with private firms.


Clarence Decatur Howe: The function of Canadian
Arsenals Limited is to operate stand-by arsenal capacity in time of peace, and to keep the arsenals in readiness to expand in time of war; and the corporation has been carrying out that function. The purpose in establishing the arsenals after the war was to have in them capacity for making anything Canada made during the last war; and all the arts of the last war have been preserved in the arsenals.
The Quebec arsenal is making shell cases, filling shells, and making the various components of explosive charges. It is carrying out a pretty well rounded program in the field of ammunition. St. Paul l'Ermite was a shell filling plant in the last war and it is handling the same work at the present time. It is filling shells made at various arsenals other than the Quebec arsenal. The Longueuil plant was equipped with finishing machinery for artillery, horizontal boring machines and machinery taken from a number of gun plants built and operated by private firms during the last war. It was a well rounded plant in finishing capacity, but it had no primary capacity. On the other hand Sorel, a much larger plant, had primary capacity and some finishing capacity, but both were out of

balance if operated separately. After a good deal of study our officers decided to combine the two plants and use the excess primary capacity of Sorel with the finishing capacity of Longueuil. That seems to have worked out very well, and additional production will be possible as a result of the combination of the two plants.
Then we have Valley field, which was an explosives plant dealing with various kinds of nitrocellulose powder, TNT and various other explosives. That plant was kept in a standby position in peace. When defence production became necessary it required a good deal of rehabilitation, and Defence Industries Limited have been retained on a management contract to put the plant in shape and bring it back into production. The Lindsay arsenal is operating as it has always operated, making shell casings and shells of various calibres, mainly the larger ones. Then coming into the Toronto area a portion of the former Research Enterprises Limited is now a branch of Canadian Arsenals which is being expanded to take over a part of the radar program. It is the nucleus of the production of early warning radar sets. The small arms division in the Toronto area is the focal point for the production of small arms. At the moment it is tooling up for 50 millimetre aircraft guns, and as soon as we determine the type of rifle to be produced it will go back into the manufacture of rifles and automatic weapons.


George Randolph Pearkes: Is the Longueuil plant owned by Canadian Arsenals and operated by them, or is it operated entirely by a separate company?


Clarence Decatur Howe: No. The Longueuil plant is
owned by the government. It was built by the government during the last war. The plant has been leased to Sorel Industries Limited, and the operating staff of the arsenal is working with Sorel Industries at the moment. The purpose of the integration is to get the larger capacity for the heavy guns being made under contract by Sorel Industries Limited.


George Randolph Pearkes: Are all those guns being
made for Canada?


Clarence Decatur Howe: No.


George Randolph Pearkes: Then under what terms has the Sorel company taken over the arsenal?


Clarence Decatur Howe: The rental has not been settled as yet, but it will be a commercial rental. The larger part of the gun contract at Sorel is for the United States government, though Canada is participating in all types of weapons being manufactured there. That is, Canada is getting a share of all those weapons.
80709-262i
Supply-Defence Production


Heber Harold Hatfield: During the last war there
was a large shell filling plant outside Montreal. Is that plant still intact and operating?


Clarence Decatur Howe: Yes. That is the plant I was
referring to as St. Paul l'Ermite.


Mr. Adamson:: I do not know whether this question has been asked already; if it has I apologize for having been out of the house. I understand the plant of Light Alloys Limited has been taken over by this department to produce light castings and alloys of magnesium and other light metals.


Clarence Decatur Howe: The plant has not been taken over; it is being operated by its former owners. We have authorized capital assistance to the plant to expand the floor space available for the manufacture of castings. It has been very successful in making the type of castings used in the Orenda engine, and it is expected that the expanded capacity will be operated to manufacture castings for that purpose.


Agar Rodney Adamson: The dominion arsenal was acting in conjunction with the plant of Canadian Acme Screw and Gear of Weston road in Toronto. Are they still in operation? During the war they made a vast number of highly technical fuses and other equipment. Is that arsenal still in operation?


Clarence Decatur Howe: It is not an arsenal; it is a privately owned establishment. Acme Screw and Gear is of course a very large supplier, and they are doing certain work for the government. Unfortunately the plant is on strike at the moment, so I cannot say it is operating just now.


Agar Rodney Adamson: Yes; I know all about that unfortunate strike.


[Stage Direction]
Item agreed to.
DEPARTMENT OF TRADE AND COMMERCE General administration-
449. Departmental administration, $513,280.
Mr. Charlton:: Is the minister prepared to make a statement on our trade position now?


Clarence Decatur Howe: Yes, I shall be glad to make a statement. I will try to keep it a little shorter than the one on defence production. During this session there have been several opportunities to discuss the activities of the Department of Trade and Commerce. We have had a debate on the Torquay trade agreements. Legislation has been brought down amending the Weights and Measures Act, which is administered by this department. During the debate on the speech from the throne I also gave a review of the work of the department. The committee will recall that wheat policy,

Supply-Trade and Commerce and the activities of the Canadian wheat board, have come in for extensive discussion from time to time during the past few months. It is hardly necessary, therefore, for me to give a lengthy statement at this time.
I would like, however, to offer a few comments on Canadian trade policy. Since the end of the war very great efforts have been made by the government, and the Department of Trade and Commerce in particular, to enlarge the volume of Canadian trade. These efforts have taken many forms. The trade commissioner service abroad has been strengthened. Canada has supported international action to reduce trade barriers. When this country was suffering from a serious shortage of dollars, the government did everything possible to encourage exports to dollar areas and to encourage imports from soft currency countries. The establishment of the international trade fair in 1948 was another evidence of the government's interest in an expanding volume of trade, both import and export.
The efforts have borne fruit. Canada's trade has expanded to an extent that few thought possible. It is in better balance visa-vis the dollar and sterling areas. The position now, however, is very different from what it has been in these last few years. We are once again in a seller's market, faced with the fact or the prospect of shortages of certain materials because of the competing demands of the defence program. In the light of this change in the trade outlook, the government has reviewed its policy to see whether the emphasis on trade is misplaced.
We have come to the conclusion that while the needs of defence are paramount, Canada continues to have a vital interest in foreign trade. The defence program, and the high rate of consumer and business spending which accompanied it, have resulted in a high level of imports. These imports must be paid for. For that reason alone we cannot afford to neglect our export trade. But there is a longer-run reason as well. All of us hope and believe that the present emergency will pass. In so far as possible, therefore, trade contacts should be retained and developed, looking to the time when Canada will once again have to seek out buyers for its surpluses.
Accordingly, as I said at the opening of the international trade fair in Toronto this year:
There is to be no general let-down in our efforts to promote export trade. That is the policy of the Department of Trade and Commerce and of the Canadian government. We are having special supply difficulties to meet in various lines of export business. We shall probably continue to have such difficulties. But the fact that we shall be giving first

priority to defence production needs is not to be taken to mean that the servicing of our export business will be pushed into the background or left without the very closest attention that we can give it.
In May the United Kingdom-Canada continuing committee on trade and economic affairs met in Ottawa. As was announced at the time, the United Kingdom hopes to buy a very much increased volume of goods in Canada during the next year. We, for our part, are anxious that the United Kingdom and the sterling area generally should continue to ship as much as possible to Canada. The discussions were most useful, and it is our hope that they will result not only in a substantial increase in the volume of United Kingdom-Canada trade but in further progress towards the restoration of normal trading relationships between the sterling area and Canada, which is our ultimate goal.
The United Kingdom talks were immediately followed by discussions with the British West Indies. There have always been close commercial ties between Canada and the British West Indies, and the imposition of restrictions upon imports from Canada into these islands had undoubtedly been the cause of a good deal of inconvenience and disruption to both importers and exporters. The introduction of the trade liberalization plan at the beginning of this year was an important step forward, and we are hopeful that it will be followed in the near future by further progress in the same direction.
A French trade mission then met with Canadian officials. This is not the first time that such Franco-Canadian trade talks have been held. Indeed they may become a more or less regular event. While our trade with France is not very large, it is, I believe, capable of expansion and the discussions this year were concerned with how this could best be done. We have been particularly impressed by the growing interest of France in the Canadian market.
Finally came informal discussions with a New Zealand trade delegation led by Hon. C. M. Bowden. Like other sterling area countries, New Zealand has been imposing very strict limitations on imports from Canada and other dollar countries. During the talks with Mr. Bowden, it was evident that New Zealand shares our interest in the restoration of normal trade relationships, and that there is more likelihood of progress in that direction now than for some time.
Another evidence of the government's continuing interest in trade was the decision to hold the Canadian international trade fair again in 1952. In many respects the fair held this year was the most successful since

the first fair was held in 1948. But the extent of participation by Canadian manufacturers and industrialists is disappointing. Furthermore, there is a good deal of uncertainty about the effects of defence preparations upon trade. In deciding to hold a fair next year the government is taking some risks. But, on the other hand, to abandon the fair this year might have been taken as evidence that the government no longer attaches the same importance to the development of trade, which would have had unfortunate repercussions at home and abroad. Whether the fair will continue beyond 1952 depends upon the extent to which Canadian businessmen take advantage of the opportunity provided to sell their wares not only abroad but to their neighbours at home.
In brief, Mr. Chairman, the Department of Trade and Commerce is continuing to take an active interest in the promotion of Canada's trade.


Agar Rodney Adamson: Mr. Chairman, I know that there was a good deal of disappointment over this year's Canadian international trade fair because of the lack of participation by Canadian manufacturers. I visited the fair on more than one occasion and was certainly distressed, to put it mildly, to see the lack of interest which our own manufacturers displayed in the fair. One would have hoped that this trade fair would have been the beginning of international trade with the rest of the world by Canada, and particularly those nations with whom we did not normally trade before the war. The pattern of trade that we are going to see in the years to come may be, and probably will be, very different from the old triangular pattern of trade that we saw prior to the war. At that time we were more or less the sterling broker for the United Kingdom and the United States.
I was surprised to find the lack of interest, and I may say rather disappointed, because I had hoped that this trade fair would have opened up an opportunity for the exhibition of the goods that we had to sell to the countries that are just emerging from the aftermath of the war and the currency and other restrictions imposed by war conditions. The foreign countries, particularly Holland, Italy, and to a degree Germany, had an excellent exhibit. The machine tool exhibit I thought was in every way admirable, but the fair this year seemed to be lacking something. Whether it was a disbelief in world trade, or whether it was some degree of disenchantment of the Canadian manufacturer with the
Supply-Trade and Commerce outlook, I do not know. But certainly we have no cause for satisfaction over the present situation.
Things are difficult. The problem of currency, the problem of exchange, is a besetting evil that is destroying today all attempts at international trade, and I hope that will be the subject of debate in this house at another time; but it seemed to me, Mr. Chairman, that there was a lack of appreciation of Canada's opportunity at the present time to open out in new markets. I just wonder whether the minister would care to comment on what must be to him, and the officials who worked so hard at this fair, a rather disappointing situation.


Clarence Decatur Howe: I would not say that the fair this year was disappointing. In many ways I think it was the best fair that we have held. However, if the fair suffered from anything it suffered from the fact that it was being held in a seller's market. Practically everything that was on exhibit at the fair was sold on the first day of the fair, and anyone capable of taking orders had his order book filled very early.
The department is concerned about the lack of interest by Canadian exhibitors. Very serious consideration was given to making this year's fair the last, but we had such a strong protest from the Toronto board of trade and from other business organizations across Canada, particularly from people who did not exhibit in the fair itself, we decided to continue the fair for one more year with the distinct warning that if there is no increase in Canadian participation in 1952, 1952 will be the last trade fair.


George Randolph Pearkes: The minister has spoken
about trade with certain European countries. I want to raise a question regarding trade with China, because within the last few days I have received an air mail letter from what I believe to be a responsible organization in Hong Kong, known as the China Coast Navigating and Engineering Officers Guild. So far as I know it is an organization consisting of officers of the merchant marine of commonwealth countries.
In this letter the general secretary points out that there are certain vessels belonging to the Ming Sung Company, a company that I believe has its offices in Montreal, because I took the trouble to look up the directory and I found that it was registered there. It is claimed that certain ships of this company are trading between Hong Kong and Macao, where they are carrying passengers and cargo, between Hong Kong. Macao and

Supply-Trade and Commerce Canton, which would be of course a triangular line, again carrying passengers and cargo, and between Hong Kong and Canton, where they are carrying cargoes only.
I understand that these ships are ships which were built in Canada and were to be sold to the central Chinese government before that government fell, and that now they are operating out of Hong Kong under a Canadian flag, and still with Canadian registry, and that the government derives some revenue from this operation. Canton of course is a port which is under direct control of a government which has not been recognized by the Canadian government, and is to all intents and purposes a government with which we are in active warlike operations in Korea.
What cargoes are these vessels carrying? I ask that question because, according to the letter I have, and I quote:
Eye witnesses state that included in the daily cargoes is essential war material.
Of course if that is a fact it is something which will be very distressing to a great many people in Canada. I am told that the merchant naval officers associations, both in Canada and in Hong Kong, are seriously perturbed over this situation. There is no doubt that the letter states that these vessels are trading under the Canadian flag and have it painted prominently on both sides. The letter says that they wear the Canadian ensign in Chinese communist ports. These vessels are officered and manned by Chinese, and in one case there is- a Russian captain, according to the information. Without going into it in more detail at the present time I wonder whether the minister has any information about that situation, and if he can tell us whether there is any trade going on between Hong Kong and communist China by ships of Canadian registry or carrying the Canadian flag?


Clarence Decatur Howe: These ships were built in
Canada by an arrangement that was current post-war, by which private transactions between Canadian firms and Chinese firms, or firms of other countries, could be carried out with the guarantee of both governments guaranteeing the loan. The Ming Sung Company came here and made a contract with two or three Canadian shipyards. They had a guarantee of the then government of China, and the loan was jointly guaranteed by the then government of China and the government of Canada. The ships were sold in the ordinary way through a commercial transaction, and the ships passed to the flag


of China, subject to a mortgage held by the Canadian shipyard and deposited with the bank that lent the money.
All went well until the Chinese government, the government of Chiang Kai-shek, fell, and then the banks began to worry a little about their loan. In the uncertain situation that followed, it seemed wise to transfer the ships to the Canadian flag, which was done at the request of the Ming Sung Company, which expressed a desire to protect their loans in Canada. I may say that the loans in Canada are not in default at the moment. The payments have been made when due. I do not know the outstanding balance, but while there are substantial balances there is no default in the loan. However, it is a fact that the ships are operating under the Canadian flag. The government is not happy about it. The operation of the ships is supervised by the government of Hong Kong which, as my hon. friend knows, is also a British colony. Whether the ships are carrying contraband in their trips to Canton and up the Yangtze river I cannot say. I hope they are not. If they are-well, I do not know what we could do about it. While they are Canadian flag ships they are not in any way subject to the direction of the Canadian government.
They are not owned by the Canadian government. We can withdraw the flag, and that is about all we can do. But the government has no direct interest in the situation other than that they are guarantor to a Canadian bank for part of the money that built the ships for the Ming Sung Company.


George Randolph Pearkes: If these ships are sailing under the Canadian flag would not the government of Canada be responsible for seeing that these ships were manned according to the Canada Shipping Act, that they had officers of Canadian nationality or at least carrying Canadian certificates? Could not the certificates be withdrawn from the ships' officers if they are not carrying out the other regulations?


Clarence Decatur Howe: I am sorry to say that is not the situation. When the flag was transferred the ships were exempted from the shipping regulations which required them to be officered by Canadians.


George Randolph Pearkes: When they came back under the Canadian flag would they not then have to conform to the Canadian shipping regulations?


Clarence Decatur Howe: When they came back under the Canadian flag they were exempted from the requirements. This was the most disturbing condition to meet and, rather than let the ships go, which might have been

the wisest course, we did take what seemed to be the practical course, to bring the physical ships under the Canadian flag, but to exempt the ships from the requirements of the Canada Shipping Act as long as they operated in Chinese waters.


George Randolph Pearkes: I had no idea that these ships were carrying out operations right into the heart of China, up the Yangtze river. That is the first time I had heard about it. I did not know they were still operating into the heart of Red China. It is inconceivable that they are not carrying material there which would be very useful for the prosecution of the war by Red China-and our Canadian boys today are fighting against Red China up in Korea. . I cannot help thinking that the government must take some firmer action, even if it had to confiscate those ships. It seems to me an appalling situation.


Clarence Decatur Howe: How would we confiscate them? Would we send the army up the Yangtze to take them over? That is about the only way we could get our hands on them, I think.


George Randolph Pearkes: No. If they are operating out of Hong Kong, that is a long way from the Yangtze river. We have Canadian destroyers in those waters now. Perhaps those Canadian destroyers could do something about it.


Clarence Decatur Howe: I am informed that the two on the Yangtze river have been seized by the communists, and they are operated by the communists. They may or may not carry the flag. I doubt very much if they carry the Canadian flag. I think those two ships that have been seized are carrying the communist flag. The others are operating out of Hong Kong and we are assured by the Hong Kong officials that they are not carrying contraband.


George Randolph Pearkes: How many ships are there?


Clarence Decatur Howe: There are five ships, two others have been seized by the communists.


George Randolph Pearkes: There are two up the Yangtze, making up the original seven?


Clarence Decatur Howe: Yes.


George Randolph Pearkes: 1 think it is a pretty sorry situation.


Agar Rodney Adamson: Where are they registered? What is their home port-Vancouver or Montreal?


Clarence Decatur Howe: I am sorry, but I cannot say.


An hon. Member:: Toronto.


Clarence Decatur Howe: It might easily be Toronto.


Agar Rodney Adamson: It might, at that.
Supply-Trade and Commerce


Clarence Decatur Howe: And they are not my problem,
I should say. I had nothing to do with them, except that when they got into difficulty I was called in to try to straighten out the trouble. But they have nothing to do with my department, I am happy to say.


Howard Charles Green: I think the minister said there are mortgages on the ships. Would it not be possible to have them seized and sold under those mortgages in Hong Kong, and in that way clean up this mess?


Clarence Decatur Howe: It might not be the right thing to do. The Department of External Affairs and the Department of Finance are struggling with the situation. 1 should not be talking about it at all, because I know very little about it, and I have nothing to do with it.


George Randolph Pearkes: Have we any check on the cargoes taken out on these ships? We have a trade commissioner, have we not, in Hong Kong? Has he any responsibility in the matter?


Clarence Decatur Howe: The Hong Kong government is responsible for checking cargo in and out of Hong Kong, and I am sure they do it efficiently. As I say, with respect to the two ships up the Yangtze, I make no promises about them.


Stanley Howard Knowles: The two ships up the Yangtze are down the river.


Heber Harold Hatfield: We have two good dollar markets, one in Cuba and one in Venezuela. What is being done to increase our trade with those two countries? We used to ship our maritime products to Cuba. We have lost most of that trade on account of the duties. Venezuela is the only South American country which is a dollar market. They have been taking a lot of produce, including potatoes, from the maritime provinces lately. I was wondering what is being done to increase trade with Venezuela.


Clarence Decatur Howe: We have a large and growing trade with Venezuela, of which I hope to have the figures in a moment. We are doing everything we can to give that market good service, and I think our relations are most cordial.


Heber Harold Hatfield: The trade is growing there?


Clarence Decatur Howe: The trade is growing every year, yes. Exports to Venezuela in 1947 were $12,988,625; in 1948,	$16,934,563;	1949,
$27,688,637; and 1950, $25,456,741.
Our imports from Venezuela in 1947 were $46 million; 1948, $94 million; 1949, $91 million and 1950, $87 million. The imports of course from Venezuela are chiefly of oil. So it should be a good market for Canada because the balance of trade is in favour of Venezuela.

Supply-Trade and Commerce
So far as Cuba is concerned, our trade relations there should be considerably better because of our agreement to take 75,000 short tons of sugar annually from that country.


John Horne Blackmore: I have wondered whether it would be possible for me to get the general picture of the functions of the Department of Trade and Commerce. It is a department, we must admit, that does a good deal of work. I am wondering what its general aims are. I might commence questioning to obtain the information I want by asking the minister what was the purpose of holding the international trade fair in Toronto. Was it to enable Canadian producers to sell more Canadian goods abroad, or was it to enable Canada to buy more goods from abroad?


Clarence Decatur Howe: It was to set up a marketplace where goods from Canada and goods from abroad could be displayed and purchased either by Canadians or by foreign buyers, as the circumstances might permit. The purpose was to assist exports and to assist Canadian buyers in selecting imports. One distinct purpose it has achieved is in putting our manufacturers on their toes. They have seen displayed the best products of a great number of countries abroad and I think they are making better articles as a result of seeing what the competition is in foreign markets.
The difficulty in offering Canadian goods for sale abroad is the currency restrictions. We hope that they are moving toward the end of currency restrictions and if that should happen I am sure there will be greater Canadian participation in the fair. I believe the fair has served a useful purpose. When there was talk of closing it up this year we received protests in a volume that really surprised me. The future of the fair is not too definite. We will try it one more year and if we get greater Canadian participation we will try to make it a permanent feature. Otherwise I think perhaps we may wind it up.


John Horne Blackmore: Are there officials in the department whose duty it is to look over the broad field 'to decide what is best for Canada? We in Canada are capable of producing certain goods to our advantage, and it is to our advantage to sell certain goods abroad. What goods would it pay us to produce and sell abroad, and what goods would it not be in the best interests of the Canadian economy to produce and sell abroad? What goods could we buy advantageously from abroad? If questions like that were asked it seems to me that we would have an over-all purpose in mindi.
In order to illustrate what I have in mind I shall refer to something which I have talked


about in this house from time to time for fifteen years-beet sugar. I do not propose to discuss sugar beets, I simply refer to them . as an illustration. It is well known that the production of beet sugar enriches the land and it enables us to feed livestock to advantage. It provides a number of advantages to Canadian economy which are not given by many manufactures.
Are there commodities which Canada could produce which would benefit the Canadian economy generally in the way much as the beet sugar industry does? Would it not be wise for us to single out such commodities and aim to sell them rather than to sell such commodities as zinc, copper, lead and other base metals which actually permanently deplete our resources? If we expand the sale of such commodities overmuch our grandchildren will find in this country a pile of rocks instead of a great heritage passed on to them.
It seems to me that we have reached the point in our national life where considerations of this sort ought to be rather prominent in our thinking. I am trying to bring matters down to a focus so that the minister will have some chance of answering. Are we going too far in exporting wood pulp, for instance? Are we selling so much wood pulp abroad that we are depleting our forests beyond the point to which we should deplete them? Are we selling fish abroad to the extent where we are tending to deplete our fish resources? Has the department consciously contemplated these things generally and, if so, what has been the result of the departmental thinking?
Have they decided what commodities we can afford to export? It is quite obvious that if we continue to produce wheat and sell it abroad, sooner or later we are going to deplete the fertility of our soil. If that goes on too far then the great-grandchildren of this generation will find themselves in a country no longer rich as it once was. That is what will happen unless we take some measures to restore the fertility of our soil now being exhausted by the production of crops like wheat, oats and barley for export abroad.
Has the minister's department given conscious thought to matters such as these? After the minister finishes with these questions I am going to ask if the department has given conscious thought to the things we ought to be importing rather than producing at home.


Clarence Decatur Howe: As I see it, the function of the Department of Trade and Commerce is to find markets for any surpluses Canada may have. It has never been the purpose of the

department to tell Canadians what they should produce. It is the function of the department to dispose of any production that is surplus over home requirements. For that purpose we maintain offices in almost every country of the world and have there aggressive representatives who find markets for anything that we have, as surplus.
My hon. friend has suggested that we should plan our economy, but as an illustration he chose a most unfortunate item. A great many countries of the world produce sugar from beets, but I do not know of any beet sugar from any country that moves into the export market. Sugar beets have the geographical advantage that they can be grown where the sugar is consumed. Their production is beneficial to the soil although I think my hon. friend will agree that it is hard on the labour that produces the beets. It is not an easy matter to grow sugar beets and harvest them. Nevertheless, it is a good domestic crop. This industry is being kept healthy by duties against cane sugar and by any other help the government can give.
I cannot agree that we should keep our metals in the ground. It is through the mining of metals that the waste spaces of Canada have been populated and made prosperous. I do not suppose there would be much of a settlement around Kimberley except for the mining that is carried on there, and I am sure that there would not be much of a settlement around Sudbury or Flin Flon were it not for the mines in those areas. Canada is a country of varying resources and each district is made possible by the exploitation of some natural resource that can be produced in surplus.


John Horne Blackmore: Apparently the Department of Trade and Commerce looks upon itself more or less as a clearing house; it does not aim to give leadership or guidance to the nation in respect of products which it. would be valuable to the nation to produce or import. The department merely takes what is produced and endeavours to dispose of it to best advantage. I do not know whether it will be in order to ask the minister this question as it may be considered to be an unfair question. I wonder if the minister does not think that somewhere in Canada we ought to have an organization thinking in terms of the future. The minister says that we have to exploit our resources, and of course I know what he means. It would not benefit us to keep all our minerals in the ground, but nevertheless I think the minister will grant, without any argument at all, that it is an exceedingly unwise procedure to exhaust the minerals in any given area. For example, it is conceivable that Sudbury might 80709-263
Supply-Trade and Commerce become a ghost town in due time, and Kimberley might become a ghost town. The question will have to -be raised some time before it is too late as to how many towns we can afford to build up and then allow to become ghosts.


Clarence Decatur Howe: I might suggest there are ministries that have the job to which my friend has referred. For instance, we have a Minister of Agriculture and the Department of Agriculture. Their duty is to keep the agricultural industry of Canada healthy, and each province has an agricultural department for the same purpose. The same is true of mining. We have a minister of mines and each province has a minister of mines, their duty being to make sure that the mineral assets of the country are properly harvested. In the same way the forests belong to the provinces, and each province has a minister of forests. We have a department of government that has general oversight over forests from the dominion's point of view. The work of planning the use of Canada's resources is handled, but it is not handled by the Department of Trade and Commerce. That is the point I am making. I would not like my hon. friend to think I was implying that the job was not being done.


John Horne Blackmore: That is what I wanted to know.


Gordon Francis Higgins: I should like to ask the minister what significance he attaches to the present price war in the United States. Does he see it spreading to Canada?


Clarence Decatur Howe: As far as I understand the situation, they had fair trade laws in the United States which provided that if a contract was made between the producer of a proprietary article and one distributor, the price stated in that contract applied to all distributors in the area. That law was set aside by one of the high courts of the United States with the result that certain department stores undertook special sales of these proprietary articles that they were free to mark down for the first time. That developed into price competition. It was perhaps speeded up owing to the fact that department store sales were off anyway, and there was a desire to clear stock and speed up distribution through department stores. I hardly think it is a big enough affair to be called a war. It was a skirmish between four or five' or six large department stores in the city of New York. I think it has hardly spread outside that area, and I think it has no great significance in the over-all economic situation.


Gordon Francis Higgins: You do not see it approaching Canada at all?


Clarence Decatur Howe: No.

Supply-Trade and Commerce


George Matheson Murray: In view of the great industrial development of the west, would the minister consider staging the great trade fair in the west next year having in mind the manufacturing that takes place in Vancouver, Seattle, Los Angeles and elsewhere along the Pacific coast, and the fact that we are now reviving trade with Japan, South America, and so on? Perhaps by next year there may be peace in the Pacific, and the trade fair could be very well staged some place in British Columbia. It would give the mining people particularly an opportunity in the same way that the aluminum people have taken very good advantage of the opportunity to exhibit at Toronto. I want to congratulate the department on staging the fair. I have attended it on two occasions. I find it is a tremendous emporium, and I am sure the bringing together of these people from all these nations with their exhibits and merchandise is of tremendous assistance towards world peace. I should like to see it staged in Vancouver.


Clarence Decatur Howe: I am sure my officers will take note of the hon. member's remarks.


Louis-René Beaudoin: Could we not reserve our remarks on fairs and exhibitions until we reach items 455 and 456?


Howard Charles Green: Can the minister tell us the trend of Canada's trade balance in 1951? I was quite struck by a little publication entitled "Business Review" issued by the Bank of Montreal under date of May 23, 1951. They say in part:
... a closer analysis- of last year's external transactions, viewed in conjunction with trade trends thus far in 1951, reveals some significant changes that flash a light of warning against an overly complacent attitude toward this country's position on international account.
Dealing with the 1951 position in so far as merchandise trading between Canada and the United States is concerned they say:
In merchandise trading transactions, the early months of 1951 have witnessed an abrupt reversal of the former welcome contraction of our deficit with the United States and a correspondingly sharp accentuation of the unfavourable trend in our overall balance. While average monthly shipments across the border in the first quarter of this year were about 5 per cent higher in value than throughout 1950, imports were up by 30 per cent. Thus the trade deficit with the U.S.A. in the three months to the end of March-
That is the present year.
*-was about $140 millions, as contrasted with only $47 millions for the whole of last year. The value of merchandise moving across the seas in both directions has shown little significant change. The consequence is that Canadian merchandise trade with all countries, which resulted in a reduced but still favourable balance of $10 millions in the full year 1950, has shown an unfavourable balance of $124 millions in the first quarter of 1951.


The statement indicates that the unfavourable balance with the United States is a great deal higher in the first three months of 1951 than it was last year, and also that our unfavourable balance with regard to the world at large is a great deal higher than it was in 1950. Can the minister tell us whether or not these figures are correct and, if so, whether that trend has continued through April and May?


Clarence Decatur Howe: The figures are quite correct. Our trade with the United States is out of balance through abnormal imports from the United States. Our exports to the United States are running at a record level, considerably higher than at any former time in history. But with the purchase of war materials from that country, which have been coming in in volume, and the tremendous capital investment program going on in Canada, which exceeds by far any previous record, we have been buying materials from the United States in excess of normal purchases. Aside from that the balance has not changed greatly. Our trade with Great Britain is in about the same balance as it was last year, and also our trade with the sterling area. Trade with South America has grown greatly but it is in fair balance. The balance has hot changed much. Any change that has taken place is in our trade with the United States and is the result of greatly expanded imports from that country. I believe that this situation is abnormal. We are in a strong financial position to stand it, and I think it can be straightened out when our building boom settles down. The economic measures we have taken to check capital expansion in the country are designed to check the very circumstances my friend has called to my attention.


Howard Charles Green: Does the minister think that on merchandising transactions between Canada and the United States there will be a greater deficit this year than in 1950?


Clarence Decatur Howe: Oh, yes; very much greater.


Howard Charles Green: Canada's position will be a great deal worse -this year than it was last year, oh those transactions?


Clarence Decatur Howe: It will be further out of balance; in other words there will be a greater deficit in our account with the United States, and probably a deficit in our account with the world. The reason for that, of course, is our large investment program. My hon. friend will appreciate that as more of Canada's production is invested at home less becomes available for export, and the greater the pressure for increased imports.


Agar Rodney Adamson: I am interested in this because our adverse balance of trade at the present time with all countries is running about half a billion dollars a year. I would like the minister to enlarge on that. He has said this is largely due to capital expenditures.
I gather, from talking with manufacturers I know and from the press, that up to the present time defence orders placed in Canada by the United States have been extremely disappointing, and that so far there has been very little reciprocal business in defence equipment and defence material as between the two countries. I wonder if the minister would care to comment on that.
Then I have seen members of his department at work in various fields. I saw some of his trade commissioners in Germany, and I believe the work our trade commissioners are doing, under great difficulties, deserves the highest commendation. But each man I spoke to told me in one way or another that his principal difficulty and in fact his only difficulty in selling Canadian goods was currency control. There was no question that the goods we were producing in Canada, whether raw materials or finished products, were desirable and of the type required, but in country after country they could not import them over the barrier of currency control. Perhaps the minister would say a word on those two points, first the lack of reciprocal business in defence purchases by the United States and the difficulties in regard to currency restrictions.


Clarence Decatur Howe: I have no particular complaint to make as far as defence purchasing is concerned. The Americans were able to sell us certain war materials off the shelf, you might say, or out of stock; and those materials have been moving. We have had nothing to sell back in the way of war materials off the shelf, though we have taken contracts which will be productive as our production steps up and the goods are delivered. The contracts on both sides are not in balance, but there is a tendency for them to come into balance. I am not particularly worried about the upset in exchange due to war business between the two countries; I believe that situation will straighten out if there is the will to straighten it out, and I think everyone is doing his best along that line. I was just looking at the trade figures for the first three months, and in our account with the United States there was a deficit of $100 million, which is very close to the amount of our deficit with the world. Well, that is not too serious. If it continues at that rate during the year we will have a deficit of $400 million, and that is not anything to worry about. We have had far greater deficits. In 1947 we were losing a billion dollars a year to the United States.
Supply-Trade and Commerce However, that is a trend we do not like, but we think it is a trend that can be reversed whenever we are willing to curtail our investment program and cut down on abnormal purchasing in the United States.


Agar Rodney Adamson: Would the minister care to say anything about currency difficulties?


Clarence Decatur Howe: The currency difficulties are improving. Every time we bring trade with any country into balance we make it possible for them to relax the restrictions. In most countries with which Canada is accustomed to trade, restrictions are being relaxed to some extent. They are not being relaxed as quickly as we think they should be, but we are constantly pressing for the relaxation of restrictive measures. Some progress is being made, and we think the trend is in the right direction.


John Horne Blackmore: It seems to me a number of hon. members speak of these currency restrictions as though they had been imposed as a sort of punitive measure, instead of being something imposed through necessity. If a nation finds itself importing more goods than it is exporting, one of the most effective devices to prevent that sort of thing is to control foreign exchange, which means currency restrictions. It is quite idle to talk about removing currency restrictions unless first we do as the minister says; that is, unless we manage to enable the country concerned to sell us as much goods as it buys, or to balance its trade in a three-way arrangement. So it seems to me we are rather more optimistic than we should be if we think this matter of currency restrictions will more or less iron itself out. As long as we do not buy enough goods from Britain, for example, to enable her to buy the goods we wish to sell her, Britain will have to use quotas or currency restrictions against us in defence of her own economy.
I would like to hear a little discussion along that line. This was all involved at the time of the Bretton Woods discussion. Many hon. members seemed to think all we had to do was clamp on the restrictions envisaged by Bretton Woods and all difficulties would right themselves. That has not happened, however; now we find that they had the cart before the horse, and there seems to be quite a bit of uncertainty as to what should be done. This was one of the considerations that caused me to ask the minister the questions I put to him in the beginning. I was wondering whether it would be wise to manage the Canadian economy in such a way that we could buy from Britain the goods we need to buy in order to enable her to purchase the wheat and other commodities we desire to sell, or whether it would be wise
4130	HOUSE OF
Supply-Trade and Commerce lor us to envisage a more or less closed economy, or a balanced economy, or a selfsufficient economy in Canada and use some other means to enable Britain to buy the goods we want her to buy from us, something similar to the mutual aid device we used during the war.


Clarence Decatur Howe: I am happy to say that we
finished 1950 with an adverse trade balance with the rest of the sterling area. In other words the rest of the sterling area sold us more goods than we sold them. There was a slight balance in our favour with the United Kingdom, as between the two countries, but it was very much smaller than ever before and showed a gap that presents no particular problem. As far as the balance of trade between Canada and any sterling area country is concerned, however, there is no good reason why the barriers cannot be taken down, and we think they should be taken down much faster than that is being done.


John Horne Blackmore: That is, the barriers
between the various countries of the sterling area, but not the barriers between the sterling area and the dollar area?


Clarence Decatur Howe: The sterling area and Canada. As I say, the sterling area sold us more than we sold to the sterling area, that is including England as part of the sterling area.


Mr. Quelch:: I think the minister is to be congratulated now on bringing about this dollar situation. A few years ago we used to hear a lot in this house about our trade being on a triangular basis. We bought far more from the United States than we sold, and consequently we had to sell more to Europe and insist upon payment in dollars in order to use those dollars to make up our deficit with the United States. Consequently, as a result of that policy Europe did try to impose heavy restrictions upon trade with us in order to prevent having an unfavourable balance of trade with this country. I think the situation is far more satisfactory now. We are balancing our trade with the sterling area and trying, at the same time, to balance our trade with the United States. In other words, we are trying to increase our sales to the United States and increase our imports from the sterling area. I believe that is as it should be. If we continue that policy, I believe Europe will be willing to give up the restrictions against this country.


[Stage Direction]
Item agreed to.
450. Commodities and allocations, including assistance in the development of markets and new industry, the procurement of supplies, and contributions as detailed in the estimates, $596,973.
John Horne Blackmore: This item 450 is an item that puts a question into my mind. It contains the phrase, "including assistance in the development of markets and new industry . . ." That is the phrase which a while ago made me ask the minister if he actually was consciously endeavouring to develop new industry in Canada. If he is not, then what is the purpose of having that phrase in that item? If the purpose is to develop new industry, what new industry and why?


Clarence Decatur Howe: The commodities and allocation branch is the office which indirectly supports the trade commissioners in the field. For instance, we have specialists in almost every type of production and raw materials. We have textile specialists, livestock specialists and so on, specialists in almost every product that Canada produces in surplus. These men meet the producers in Canada, and work out their problems with them. They communicate the instructions to our trade commissioners abroad. It is the Canadian end of the trade commissioners' service. I think that is a fair way of putting it.


John Horne Blackmore: I do not wish to be critical of the minister. I believe the minister has done a magnificent job ever since he began being a minister in this country. I have told him that several times before now. But I was wondering whether or not the minister was doing the same thing for civilian production that he obviously is doing for defence production. In his fine report earlier today, he indicated quite clearly that if he finds a deficiency of any particular commodity in Canada, he goes out consciously and gets that commodity. If he has to arrange to lend money to a company to produce the commodity or give the company special depreciation, he does it.
Now then, is the minister doing a similar thing with respect to civilian production? If he is, then I should like to know what civilian production he has in mind; what he is doing, and what success he is attaining. All these matters, as the minister fully knows, are involved in Canada's supply position. If we do not keep up and improve the supply position of Canada with respect to civilian consumer goods, then we are likely to be in a bad way.


Clarence Decatur Howe: We do perhaps the job my hon. friend has in mind for industry. We point out opportunities abroad for a certain type of manufacture, and we send over the specifications to be filled. For instance, we point out to them there is an opportunity for longsleeved underwear in China or Japan or some part of the world. We send over the specifications, and find a market for the goods produced accordingly. We give industry all

the guidance that they will accept as to the the manufacture of goods suitable for certain specific markets.
I pointed out that it is not the duty of the department to do the same job for other types of production because they have separate ministries responsible for that chore, such as agriculture, fisheries, mines and other resources of the country. They have other ministries doing the same job.


John Horne Blackmore: That is about as it should be, but I am wondering if the Department of Trade and Commerce takes leadership over the other departments. Wheat is an example. I do not desire to discuss wheat, but wheat is primarily an agricultural matter. At the same time, it comes under the Department of Trade and Commerce, which has a considerable voice in respect of the wheat situation in Canada. I would think it would have a voice in any agreement to be negotiated.
Now then, when it comes to developing agricultural or forest products, is there an understanding or co-ordination between the Minister of Trade and Commerce and the other ministers so as to obtain an over-all picture of what we ought to get, and a decision as to what ought to be done?


Clarence Decatur Howe: I may point out that wheat is a good example. The Department of Trade and Commerce has the job of marketing surplus Canadian wheat. The department has nothing to do with the amount of wheat that is grown; the variety that is grown or how it is planted or harvested; that is a matter for the Department of Agriculture. The marketing of the surplus is the job of the Department of Trade and Commerce, and it is because wheat is a surplus commodity that the marketing of wheat is in the Department of Trade and Commerce.


John Horne Blackmore: May I ask one more question about that long-sleeved underwear? The minister has said he will point out to the producers of underwear in Canada that there is a market in China or Japan for longsleeved underwear. I wonder whether or not he will go so far as to give financial support to a company which would enable it to produce long-sleeved underwear, much as he would give financial support to a company producing a particular kind of ship for defence. Would he give accelerated depreciation to a company to enable it to go into the production of this particular commodity for which he found a market?


Clarence Decatur Howe: The Department of Trade and Commerce has very little to do with money.
Supply-Trade and Commerce We have no money. If anyone wants money, we send him to the Department of Finance. Trade and commerce is simply a service department with particular responsibility for exports and imports.


John Horne Blackmore: But trade and commerce, in seeking to obtain a particular item of defence production, does have the determining voice as to whether or not financial assistance will be rendered to the company engaged in the production of that commodity, does it not?


Clarence Decatur Howe: No; the Department of Trade
and Commerce is out of the defence business-it should never have been in it. Today defence business is the duty of the Department of Defence Production, which is quite different from the Department of Trade and Commerce.


John Horne Blackmore: Then the Department of
Defence Production does have a determining voice as to whether financial assistance shall be offered to a company that would be engaged in producing commodities.


Clarence Decatur Howe: Producing defence products.


John Horne Blackmore: What I am probing for
is to see whether or not there is something resembling a department of civilian production.


Clarence Decatur Howe: No.


John Horne Blackmore: It is not any part of the
function of the Department of Trade and Commerce to engage in that sort of activity?


Clarence Decatur Howe: No.


John Horne Blackmore: It looks as if we ought
to have an organization that should do something like that before long in Canada.


Mr. Maclnnis:: The minister mentioned
that wheat was a surplus commodity. Can he tell the committee how much surplus of the various grades of wheat we have at the present time?


Clarence Decatur Howe: At the present time we have
sold all that we dare to sell of grades one to five. We have a fair quantity of No. 6 wheat, and a fair quantity of feed wheat, but not too good. We hope that the whole situation will clear up shortly after the end of the crop year.


Louis-René Beaudoin: May I point out
that there will be ample opportunity to discuss wheat when we reach items 464 and 465. Shall this item carry?


[Stage Direction]
Item agreed to.
[Stage Direction]
Supply-Trade and Commerce
451. Trade commissioner service, including payment of compensation to trade commissioners for damage to and loss of furniture and effects, under regulations approved by the governor in council, $1,963,751.
John Alpheus Charlton: Can the minister give us
any idea as to how our trade position is with the South American countries? Has it improved or deteriorated?


Clarence Decatur Howe: The volume of our trade has
gone up very greatly, both exports and imports, and the improvement in the balance is favourable to Canada.


Agar Rodney Adamson: Have the trade commissioners abroad diplomatic privileges or not? I mention this because it is rather a sore point with some of them. The employees of the department of immigration, who in many cases are doing a great deal of extremely hard work under very difficult circumstances, do not enjoy diplomatic privileges, but some trade commissioners do enjoy diplomatic privileges. One or two suggested to me they wished that they all did have them. Is there any general agreement on this, or is there any general rule about whether they enjoy diplomatic privileges or not?


Clarence Decatur Howe: If a trade commissioner is attached to an embassy he does enjoy diplomatic privileges. If there is no embassy in the country he is serving he does not have diplomatic privileges. Sometimes we try to get external affairs to give him consular status, which carries with it diplomatic privileges, but there are trade commissioners who do not have diplomatic privileges, and there seems to be no way in which diplomatic privileges can be obtained for them.


Agar Rodney Adamson: I must say that the granting of diplomatic privileges to a trade commissioner is of tremendous advantage to him and is of tremendous advantage to the country. If the minister could persuade his colleague, the Secretary of State for External Affairs, to grant diplomatic privileges to these trade commissioners it would be of great advantage to all concerned.


George Alexander Drew: Under the details of the trade commissioner service the figures -are given as to the expenses of each of the various offices. I realize that there are bound to be substantial differences in regard to these offices, but would the minister explain why, for instance, the trade commissioner service at Caracas is $77,877, and the trade commissioner's office at Melbourne is $24,335? I would like to have some indication as to what considerations result in so much larger expenditure in the office at Caracas than in the office at Melbourne. I simply take them as an illustration.
[The Deputy Chairman.]


Clarence Decatur Howe: The trade commissioners are paid a basic pay, as though they lived in Ottawa, and there are supplements, depending on the cost of living in the posts to which they are assigned. Caracas has the highest cost of living in the world, as far as I know. It has that record in the trade commissioners' service. On the other hand, the cost of living in Melbourne is probably no higher than the cost of living in Ottawa. It may be a bit, but I would believe that it was not much higher than in Ottawa.


George Alexander Drew: I am taking such places as Wellington and Melbourne as places within the commonwealth where one would think the activities would be important, and then comparing them with such a place as Caracas, and for instance Manila, where the expenditures are $49,542, as compared with $20,466 in Wellington. Are the activities of these offices in the cities in the commonwealth not more important than they are in Manila or Caracas?


Clarence Decatur Howe: Well, the trade commissioners in these areas cover many countries. I suppose the trade commissioner in Caracas covers three or four other countries. He may have a larger office than the office in Melbourne. The office in the Philippines has been newly established and a drive has been made, a very successful drive, to get a share of the Philippine business. We have done big business there. I dare say some extra pressure has been put on that office, and perhaps extra expenses incurred. The very fact that it is set up new may have something to do with it. There are three offices in Australia. The work is divided.


Winfield Chester Scott McLure: What are the qualifications for appointment of trade commissioners? To my mind he should foe a man who can sell Canada and Canada's products.


Stanley Howard Knowles: Eleven o'clock.


Clarence Decatur Howe: They must be university graduates with some trade experience. Trade commissioners are taken into the service in a junior capacity, and put through a course of training which takes at least a year. The trade commissioner is sent to all parts of Canada. The first requirement is that he must know Canada and Canadian industry thoroughly. Then he is put in a junior position abroad, and gradually given the experience required to foe a trade commissioner.


Louis-René Beaudoin: Shall the item carry?


George Alexander Drew: No.
Item stands.
Progress reported.



BUSINESS OF THE HOUSE

Mr. Hughes Cleaver (Hallon):: Mr. Speaker, may I ask you to revert to motions in order to present a report of the committee on banking and commerce?


The Acting Speaker (Mr. Beaudoin):: Is it
the pleasure of the house to revert to motions?


Some hon. Members:: Agreed.



BANKING AND COMMERCE

[Stage Direction]
Seventh report of standing committee on banking and commerce.-Mr. Cleaver.

Alphonse Fournier: Mr. Speaker, tomorrow we will move adoption of the amendments made by the Senate to Bill No. 198, to amend the Customs Act, and Bill No. 355, respecting weights and measures. I understand the government agrees to those amendments.


Stanley Howard Knowles: Does the minister know what they are?


Alphonse Fournier: One is the debate on the six months question; they have extended it to twelve. I do not know what the other amendment is.


Clarence Decatur Howe: A typographical error.


Alphonse Fournier: Perhaps a clerical error-the absence of a few commas. Then tomorrow we will go into supply to consider the estimates of the Department of External Affairs and the Department of Citizenship and Immigration. Then we will proceed with Bill No. 375, to amend the Prairie Farm Rehabilitation Act, before taking up the estimates of the Department of Agriculture.


Donald Methuen Fleming: What position does the government take on the amendments made by the Senate?


Alphonse Fournier: I said the government would agree to or accept the amendments.


Winfield Chester Scott McLure: When will we have the pleasure of going over the estimates of the Minister of Public Works?


Alphonse Fournier: I am aways at the disposal of the hon. gentleman. It will be a real pleasure when I can find a moment to
Supply
discuss my own estimates. However, if the hon. member needs any information preceding the estimates, I am ready to give explanations.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[The following items were passed in committee of supply]:

[Stage Direction]
Department-
76.	Departmental administration and payments to Canadian Commercial Corporation and other corporate agencies for services provided in connection with defence purchasing and production, $5,000,000.
77.	To provide capital assistance for the construction, acquisition, extension or improvement of capital equipment or works by private contractors engaged in defence contracts, or by crown plants operated on a management-fee basis, or by crown companies under direction of the Minister of Defence Production, subject to approval of treasury board, $50,000,000.
78.	To provide for research and development of jet engines and aircraft, $1,000,000.
79.	To provide for the liquidation of contracts, including commitments of previous years related to the acquisition of assets operated by the departments of munitions and supply and reconstruction and supply or an agency of these departments; the liquidation of the assets and liabilities of closed crown companies and crown plants; and for miscellaneous and unforeseen expenses, $200,000.
80.	To authorize the transfer of funds from the Canadian Commercial Corporation Employees' Retirement Fund to the retirement fund created by the Civil Service Superannuation and Retirement Act, in respect of past contributions and accumulated interest thereon of employees transferred from the corporation to the department, $1.
Crown companies-
81.	To provide for expenses incurred by Defence Construction Limited in procuring the construction of defence projects on behalf of the Department of National Defence, $3,000,000.
Canadian Arsenals Limited-
82.	Administration and operation, $3,300,000.
83.	Construction, improvements and new equipment, $1,700,000.

[Stage Direction]
General administration-
449.	Departmental administration, $513,280.
450.	Commodities and allocations, including assistance in the development of markets and new industry, the procurement of supplies, and contributions as detailed in the estimates, $596,973.
[Stage Direction]
Friday, June 15, 1951